Monthly student loan obligation can be as much as rent payments
CHICAGO, Aug. 5 /PRNewswire/ — With student loan debt averaging $23,186 for graduates of four-year college and universities, according to a study conducted by the National Center for Education Statistics at the U.S. Department of Education, WilliamPaid has issued a challenge to renters and other student debt holders to reduce their student loans. With its 90-day challenge, WilliamPaid hopes to educate graduates on simple, smart debt reduction methods, with a goal of paying off student loans more quickly.
“The cost of education, and therefore the amount typically borrowed by students, has escalated, while salaries for recent college graduates haven’t kept pace. That level of debt means many twentysomethings, even those with full-time jobs, don’t think they have much room in their budgets after their rent payment and other necessary expenses,” says Evan Silverman, CEO of WilliamPaid, the online rent payment and credit-building service. “That’s why we’ve issued the WilliamPaid Challenge. Eliminating, or even reducing, extra spending, like lattes, cab rides and dining out, can go a long way.”
The challenge is based on the WilliamPaid Principal Principle: The fastest way to eliminate student loan debt is to reduce unnecessary indulgences and apply those savings directly to student loan principal. Small additional principal payments can save thousands in interest costs and decrease the years needed to repay loans.
According to Silverman, if a student graduates with the average debt level of $23,186 that has a 10-year repayment term and applies an additional $75 per month to principal, that student would save $2,673 in interest costs over the life of the loan and pay back the entire student loan in 34 fewer months.
Katya Fernandez, 23, has decided to take the 90-day challenge.
“I just had too many bills and my loans were the last things I would pay, aside from my credit card,” says Fernandez, who graduated last year and is working as a teacher. “Then, I started paying other bills with my credit card and so the debt kept adding up and adding up.”
Using the WilliamPaid Simple Savings Calculator, Fernandez found $400 of monthly costs that she thinks she can cut back or eliminate. Throughout the three-month challenge, she will identify and reduce unnecessary spending, with the intent of applying these extra dollars to her student loans.
“I’m a terrible spender,” she adds. “I don’t have a savings account and, when I do have a little bit of extra cash, I often spend it on something I really want, but don’t always need. I thought the challenge was a great opportunity for me to really look at what I’m spending so I can try to change my habits.”
“We hope Katya and others that take the challenge will see that a little bit of sacrifice early in life can go a long way toward achieving life-long financial freedom,” said Silverman. “At that point, Katya can enjoy all the lattes she wants.”
As the inaugural WilliamPaid Challenge participant, WilliamPaid will match every dollar Fernandez saves and applies to her student loans, up to $500. “It’s a small price to pay to help educate Katya and others about this important aspect of their lives,” said Silverman.
Follow Fernandez’s journey at www.williampaid.com, www.makecollegereality.com and on www.twitter.com/williampaid #WilliamPaidChallenge.
WilliamPaid is an online resource for renters and roommates, providing flexible rent payment options, including paying rent online with a credit or debit card, and credit building services such as having rent payments and past rent and utility payments reported to a credit bureau. WilliamPaid is headquartered in Northbrook, Ill. Learn more: www.williampaid.com.