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Not Paying Student Loan Debt Sooner can become a Bigger Problem Down the Road

This article is written by a student writer from the Her Campus at USF chapter.

When most college students pay for college or universities, they go down the path of choosing to get a loan. But what most people don’t realize is how hard it becomes to pay the loan off years down the line if you choose to not pay it off sooner or if you didn’t look into different ways to pay for college.

Student loans fall under 2 categories: Subsidized and Unsubsidized.

Subsidized: According to the University of Florida’s Office of Student Financial Aids and Scholarships, “Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.” When it comes to subsidized loans there is only so much you’re allowed to use before you’re forced to take out an unsubsidized loan.

Unsubsidized: Interest is charged during in-school, deferment, and grace periods.

Both types of student loans charge interest. One is a bit more graceful with interest times, but both still fall under the compound interest category. Compound interest is the interest on a loan or deposit that accrues on both the initial principal and the accumulated interest from previous periods. To put this in better perspective, I will be using USF’s current student loan rate on interest which is 3.73% (this interest rate is only for those who took out the loan after the date of 07/1/2021).

I will also be including those who chose to get this loan fully unsubsidized. As a freshman the maximum you can take out is $9500, with the current interest rate at the end of the first year you will be sitting at $14,742.6 in student loan debt. For the second year if you take out the full amount of $10,500 you will be looking at $25,242.6 in debt and the first interest for the new balance with a rate of 3.73% will add $941.54 to your debt. If you choose to wait until after college to pay and wait till after the 6-month additional grace period, you will be $60k+ in debt right out of college. It is much better to pay it off while you’re still in school than allowing this to spiral out of control.

Student loan debt is not something bankruptcy can remove either. Failure to pay the loan within the allotted time or payment plan will cause the loan to go into default and that will create a whole new set of unwanted problems. One of those major new problems is the loan will go into acceleration which means the entire debt balance becomes immediately due.

 Some of the best options to help avoid going into so much debt are scholarships, grants, and being able to subsidize a quarter to half of the yearly loan you have taken out.

Here are some resources you can look at to learn more about student loans:

Hello, My name is Kaitlyn my pronouns are She/Her/Hers. My major is in cybersecurity but due to change depending if I can get into the comp sci program or not. I enjoy photography, video games, writing, going to the mall, and doing very long drives. I am a huge science fiction fan and enjoy series like Stargate SG-1, Star trek Discovery.