Which Debt Should Students Get Rid of First?
- 2018 26 Jul
Which Debt Should Students Get Rid of First? (Consumer Debt, Student Loans, etc)
Student loans are the only type of debt that, in most cases, cannot be dismissed even though bankruptcy.
Student loan interest rates range from 3% – 6.8%, so compared to other consumer debt, like credit cards for example, it tends to be lower. Student loan balances, however, tend to be higher (averaging $26,500 – $27,500) than a typical credit card or even car loan. Assuming that recent graduates have various debt balances including student loans, car loans and credit card loans, tackling the lowest balance debt first can help them score quick wins. Once paid off, roll that payment over to the next smallest balance, which in turn will accelerate the debt pay off. It’s critical that no new debt is incurred in order to keep the debt roll down method working to the max.