Graduating into Debt

By: Lindsey Ward
By: Lindsey Ward

May 19, 2007

“Debt is anytime you borrow money for some purpose,” said David Marotta of Marotta Asset Management.

Whether you swipe that card at the mall or you take out loans to pay for four years of college, it’s nearly impossible to stay out of any kind of debt, but not all debt is bad.

“Good debt is anything that's going to pay you more money in the long run than it costs you to borrow it,” said Marotta.

The average college student graduates $20,000 in the red, but in a lifetime, that student will make a million dollars more than if they didn't go to college at all.

Marotta advises his clients to make sure student loans are the last place they invest money. He said pay only the minimum amount each month and put the rest into savings.

“The fastest way to pay off your student loan is to pay off the loan as slow as possible and grow your assets until they're more than your loan, and then you can slap it over anytime you want,” Marotta said.

There's more good news. Don't be so worried about having those loans when you go to borrow more money.

“Creditors also look at student loans fairly benignly,” said Marotta.

The only way student loans can hurt your credit score is if you aren't paying them on time.

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