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College Students Feeling The Cost Of Loans
(CBS News) The rising cost of borrowing money is keenly felt by college students and recent graduates, who face unprecedented debt from government-backed student loans. Those rates will rise on Saturday, but as CBS News correspondent Randall Pinkston reports, young borrowers still have a chance to catch a break before the deadline. Jason DeBonis and Katrina Lust can use any breaks they can find. The two medical students are young and in love. They plan to marry in May. Their wedding gift to each other: a combined total of nearly $500,000 in student loans. "I think the reality is going to set in when we're actually getting salaries and a certain percentage of our salary is going to go into paying off that debt," DeBonis says. Before they earn a dollar as doctors, they're already deep in debt.
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Ask Max – Payoff debt or takeoff in funds?
We are a 26-year-old couple getting married and want to invest our wedding money in the best way possible. (We estimate receiving 25k.) My fianc is still in grad school, and I am paying off student loans. Should we put the money toward paying off our educations? Or should we invest it in a mutual fund?
Ray and Margaret Salem, PA
Dear Ray and Margaret,
As an investment advisor, I should tell you to pay off all debts before investing because it's unlikely you'll earn more investing than the rate on your debts especially after taxes, commissions, and the like. Plus, it's a lower risk strategy imagine your investments go sour, you lose your job (the two can be correlated with the economy) AND you still have your debts.
That said, I'd only pay off high interest rate debt like credit cards (and then only if you WON'T rack the debt right back up).