A Student Loan Game Plan

One of the nicest things about my job is that I get to travel around the country speaking to audiences about managing their money and listening to people talk about their successes and challenges.

Earlier this year, at the invitation of Sidney James-Nakhjavan, I enjoyed the hospitality of Auburn University, where I spoke to the Women's Philanthropy Board at the College of Human Sciences.

I also met with a number of Auburn students who had taken Sid's seminar in personal finance, using my book, Money Smart Women, as a text. One of those students was Brandy Howell, who endeared herself to me by bringing along a copy of the book marked with copious Post-its.

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Even more impressive, Brandy is now a money-smart young woman who has laid out a plan for managing her money after college -- in particular, paying off $90,000 in student loans.

A native of Marietta, Ga., Brandy wouldn't trade her Auburn education for all the peaches in Georgia. But attending school in Alabama instead of paying in-state tuition in Georgia cost her dearly. "At 18, you think you can borrow the money and pay it back," she says. "You don't really know what it means."

Now older and wiser about finances, Brandy, who graduated this year with a degree in apparel merchandising, has a game plan for paying off those loans (see How Much College Debt is Too Much?). And she is tracking her spending down to the penny.

To save money while fulfilling an internship requirement before graduating, she moved back home instead of renting an apartment. Her internship at South of Market, an antique-furniture store in Atlanta, led to an offer of a full-time job as assistant manager.

Brandy consolidated her Stafford student loans a couple of years ago at rock-bottom rates, but she's still paying double-digit interest on some of her private loans. She plans to consolidate them and to qualify for an interest-rate discount by setting up automatic payments from her checking account.

Over the past couple of years, her grandfather has been giving her $500 a month toward her college costs. She used the money to pay for living expenses, and now she plans to funnel it toward paying off her high-cost student loans. She doesn't have any credit-card debt. And she's crossing her fingers that her paid-off 2000 Mitsubishi Eclipse continues to chug along.

Brandy also has some thought-provoking advice for families trying to decide between in-state and out-of-state schools. "It would have been a setback for me to go to college where all my friends were going," she says. "I wanted a chance to grow, and Auburn offered lots of opportunities."

Still, "it was a shock to see how fast my family's college savings disappeared." If you're going to take on debt, says Brandy, "challenge yourself and get an education. Don't go out of state if you're just going to play."

For more advice, see Janet's College-Financing Series:

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.