One million 2016 college grads making their first student loan payment

Easiest ways to pay it off faster
Posted at 5:30 PM, Nov 04, 2016
and last updated 2016-11-04 17:30:30-04

Student loans powered Jason Butler to a four year degree in marketing. But this grad who obtained his marketing degree during the recession didn't land his first decent paying full time job for a year.

Butler defaulted on his student loan payments while hunting for work. He estimates it cost him about 20 grand in late fees and interest turning his $45,000 loan into a $69,000 black hole.

Butler who now works as a financial aid counselor says he took on extra jobs even sold some personal items to attack his student loan debt. He's paid off about 10 grand in the last 2 years.

So here's how repayment works. Standard loans equal 120 payments for 10 years.That amounts to $331 monthly payments for a $31,000 balance. Want to pay it off quicker just toss in an extra hundred and the debt is paid off in 7 years.

But what if you need lower payments? You can extend the loans to bring down the monthly tab. The down side, your total interest will hit $13 grand compared to $6 thousand with the 7 year pay off on that same loan. Here's the rule of thumb. Your student loan payment should not exceed 10 percent of your pretax pay.