There was a time I swore I’d never pay off student loan debt a second sooner than required. Why would I do something dumb like that? There were so many benefits to keeping it around until 2020.

By paying off my student loan, I’d avoid 2.625% of interest on the outstanding balance each year. That’s nothing. I know people who pay over 5.00% on their government loans. And don’t get me started on people with private student loan debt. I was miles ahead of them on the interest rate front. It felt real good knowing I had the foresight to graduate from college when interest rates were at historical lows.

I’d come out ahead just by banking the money I could’ve used to pay down debt. Not long ago, ING Direct was paying 4.50% – 4.75% on savings accounts. Since I didn’t have more than $100,000 (former FDIC insurance limits) on deposit, the risk of losing my money was nonexistent.

Then, get this. After four years of on time payments, Sallie Mae reduced my interest rate a full percentage point. Who would race to pay off a debt that only cost 1.625% in tax deductible interest? And on an installment loan too? Please. It’s one thing to pay off lines of credit or payday loans. But once you pay off your student loan, it’s paid. You can’t go back to the lender and ask for credit in the event of an emergency.

Did I mention that 1.625% was fixed?  As long as I paid my bill on time, I’d never have to worry about the interest rate increasing.

With student loans (at least the government kind), you have more options when it comes to repayment. If you lose your job, you can postpone payments by placing your loans in deferment or forebearance. So even if I stumbled on temporary hard times, I could avoid making the payments without hurting my credit.

Yeah. Paying off student loan debt made absolutely no sense.

So why’d I do it?

Because freedom tastes good.

I don’t expect you to agree or disagree with me. Everyday another person makes the decision to extend the life of a student loan as long as possible. (I have no statistical evidence to support that statement.)  What I’d like to know is the choice you made. If you have student loan debt, do you plan on paying it off early? Why?

The following is a guest post from Tiá Jones, MBA.

Picture it. On a blistering cold evening in the winter of 2005, I received a frantic phone call from a family member whose loan application had just been denied.

To protect the indigent, let’s refer to this family member as Larissa. Unable to obtain law school financing due to her poor credit, Larissa contacted the only relative (albeit a single mother of a one-year old son) who could solve her problem.

Other family members were undesirable credit risks, i.e, plagued by bad credit. I was the only one stupid financially stable enough to cosign a student loan of a whopping $40,000. With a 7.5% interest rate, no less.

Fast forward to 2009. Still a single mother, but a newly minted MBA, I was all fired up to purchase my first home. With a 741 FICO score, decent savings, and preapproval letter in hand, I found the perfect place. I even managed to negotiate $14,000 off the asking price. I paid for inspections, gave my landlord notice to vacate, then packed up my belongings and put them in storage.

Days before closing, I discovered there was one stipulation remaining on my file. Out of the blue, this $40,000 student loan – which, according to my inexperienced loan officer, would be a non issue – stood between me and my dream home. After a meticulous review of my file, in the same fashion and passion as Suze Orman, the underwriter sent me an e-mail:

“YOU ARE DENIED! YOUR DEBT-TO-INCOME RATIO IS TOO HIGH!”

There is a happy ending to this story. At least Larissa can call herself a lawyer now. I, however, am forced to look for an apartment rental because my son starts school in 8 days.

I won’t put you to sleep with all the gory details of this financial blooper. I fear the final tally will cause me to lose my lunch, but here’s a rough sketch of what it’s cost me.

So if my story wasn’t enough to convince you, I want to provide the top 4 reasons you should never ever cosign a loan.

1. People who need cosigners need them because the lender doesn’t think they’ll repay the loan. When have you heard of anyone with a good cosigning experience?
2. No one is worth risking your financial future (maybe your kid or spouse, but – eh – maybe not).
3. Cosigned debt is 100% your debt. If the primary borrower defaults or dies, you’ll be the one paying for it.
4. As evidenced by my experience, this debt is factored into calculations that determine whether you’ll get approved for a mortgage.

If you found this article after cosigning someone else’s debt…I feel sorry for you, but here are some things that you can do.

1. Take out a term life insurance policy on them. Their death doesn’t release you from paying off the debt.
2. Stay on them. Constantly remind them to renegotiate, refinance, and remove you off the loan.
3. Check your credit score. The loan may affect your ability to purchase large items such as a car or a home.
4. Call the lender. Find out what can be done to release you from the loan.
5. Make sure they’re making the payments on time. You might have to step in and make the payments to save your credit.
6. Don’t kill them. I thought this was worth mentioning after number 1.

Sometimes helping others achieve their dreams may cost you your own. Spare yourself the trouble, and learn from my mistakes.

Tiá Jones is President of New Legacy Services, LLC, a small business coaching and consulting firm.  Her clients include YouHaveMoreThanYouThink.org and SistersSpace.com.  When she is not trying to change the world through entrepreneurship, she blogs about event planning and all things pretty on TheHostessChick.com.

Last Thursday, I headed off to Ozio (a D.C. cigar bar) to celebrate the life of Michael Jackson over a couple drinks. Like a loser the independent woman I am, I went alone. Secretly, I was hoping the extreme Libertarian bartender would be working that night so that he could distract me from all the craziness that was going on. Fortunately, he wasn’t there. Instead, Mohammed the cute, aspiring anesthesiologist was on duty. At least there was one person I could talk to. The conversation we had urged me to finally write this blog post. I’ve been putting it off for a while.

Let’s talk about student loans.

Almost since I started reading about personal finance, experts in the field have been harping about how student loans are “good debt.” The only other types of debt that fall into this category, according to most financial gurus, are mortgages and business loans. We’re only going to focus on student loans, but I think the others are worth noting.

Back to student loans.

I’m sure you’ve heard the statistics that support the importance of an education beyond high school. According to Education Pays: The Benefits of Higher Education for Individuals and Society, the following benefits highlight the significance of a college education:

• The typical full-time worker with a four-year college degree earns over 60% more than a worker with only a high school diploma.
• People with advance degrees earn almost two to three times as much as high school graduates over their working lives.
• Higher levels of education are closely linked to lower rates of unemployment and poverty.

Such glowing advantages have led some people to ignore the cost/benefit of higher education. Because student loans are touted as “good debt,” it’d seem as if borrowing money to attend college is perfectly okay. In many instances, it’s not.

Check out the message boards at ForgiveStudentLoanDebt.com, and you’ll find countless sob stories from people who are suffocated by student loan debt. Although I acknowledge that some times people are a victim of their circumstances, I cannot disregard the fact that many of these people crying about the onerous nature of their student loan debt made the following mistakes:

• Failed to consider whether their chosen career path would generate enough income to repay their obligations.
• Assumed they’d command a higher than average salary upon graduation.
• Performed little to no research regarding the expected demand for workers with their skills and education.
• Ignored the possibility that their true calling would end up being a much lower or no paying, e.g., stay at home parent, occupation than the one they got their degree in.
• Dropped out.

It’s unfortunate that so many people can’t buy a house, save for a child’s education, or go on vacation because of student loan debt. However, the individuals I feel most sorry for are people like Mohammed. When I asked Mohammed if he wanted to be an anesthesiologist he replied, “I don’t have a choice.” A simple statement made by a complete, but attractive, stranger broke my heart. Refer back to the three bullet points on the benefits of higher education above. Is it possible that many debt ridden college graduates don’t have the option to pursue a lower paying, yet more fulfilling, career?

In The Case for Frugality, I expressed that freedom is the motivating force behind my penny pinching ways. Being saddled with student loan debt will certainly deprive you of your freedom. Student loan debt is special. Here’s how:

• There’s no statute of limitations on federally backed student loans.
• It’s practically impossible to discharge student loan debt in bankruptcy.
• Your wages can be garnisheed and income tax refunds withheld for repayment of student loans without a court order.

I’m a strong believer in education: formal and informal. But I think it’s irresponsible to assume that obtaining a college education, regardless of the cost, automatically results in financial success. It’d also be irresponsible of me to hold out on the Income-Based Repayment option beginning July 2009. Don’t get too excited. This only applies to federal student loans, but it’s a start. Check out the video below.

Whether you think I’m cold and heartless or an absolute genius, I’m interested in your opinion.

Also, I’m curious to know how the higher educational system works in other countries. I’m only referring to the system we have here in the U.S.  Do you think the system we have is totally messed up?