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Jack Falvey's Investor Education Briefs: Student loans need a payback strategy

June 24. 2018 10:46PM

Student loans are a reality of life for many, and must be a part of financial planning. They are obligations that can’t be taken lightly.

As soon as you are no longer a student, you must accept the fact that your loans are just that; and if you value your reputation, which indeed has great value, you will make a great effort to clear your personal books of these liabilities.

The best time to deal with student loans is before you incur them. Many extend their college stays to the nine-year plan merely to avoid unmanageable debt. It is still possible to work your way through college, but it now takes far longer than the traditional four years. Parents have always been good to have, but nothing beats a final financial push if it is in the cards. They are the wild card in the process. They give new meaning to “the luck of the draw” at this stage of life.

The traditional plan is usually to sell your newly minted college credential for a mint and get out of debt overnight. That is not a workable plan. You are going to have to work longer and harder to get yourself free and clear than you might have imagined.

Entry-level jobs are not “get rich quick” opportunities. Look at the long haul and set lifestyle and career goals accordingly. Everyone would like to make a quick high-end start, but few do. Begin by holding housing expenses to a minimum. Trade in your college roommates for a real-world set. You now need a new college fund. It is a post-college fund for debt retirement. If you do things right, you can shift your thrift right into a real retirement fund once you are out from under your undergraduate debt.

The realities of the real world just keep on coming. Fortunately, graduate school is not a must for most, so dodging an additional debt bullet is a move most can understand. Paying off one before obligating yourself for another fits with the timing of delaying grad school in favor of some life experience and hoped-for increased earning power.

College loans teach lasting lessons long after class. Living Econ 101 is an ongoing case study. You need an A if you are to make the grade in Finance 404.

Jack Falvey is a frequent contributor to the Union Leader, Barron’s and The Wall Street Journal. He can be contacted at


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