How to Manage Student Loan Debt

It has been reported that every 1 in 5 households (USA) owe student debt. Moreover, it will take at least a decade for 40 percent of the students to pay off their loans. This indeed begs the question, is going to college a meaningful investment, given the rising cost of education?

However, to build a successful career, one requires a college degree but your preference must depend on affordability rather that opting for pricey colleges, which only leave you with crippling loan payment, one that will take years to pay-off. The situation for the current crop of students/graduates is complicated as only a handful will be able to attain scholarships. Keeping this in mind, follow some of the below mentioned steps carefully that can help you manage your loan expenses.

Instructions

  • 1

    Before you even consider getting a student loan, make sure that you have researched the difference between grants, scholarships and loans, all of which come in the category of free financial aid but have different terms and conditions. Seek for a state-financed loan rather than a private one as the interest rate for the former will be lower, with more transparency. Private loan should be your last resort so consider all your options before picking one.

  • 2

    Have a clear understanding of the debt you owe as it will help you determine your budget. Once you know the amount you need to pay each month or annually on the loan, then automatically it will help you to sort out your personal expenses. Categorize them as well, under fixed like rent, student loan fee etc and under variable such as leisure and food.

  • 3

    Also do some saving. It is an essential part of your budget. One tends to neglect this but try to save your funds as it will help you in emergency. Also, get advice from your closed ones who have been in such situation and have managed it successfully.

  • 4

    Depending on your current state, if you are working, then use an income-based option which automatically deducts your loan payments from your salary and further allows you to save a certain proportion. It will clearly reduce the risk of complications.

  • 5

    Establish an understanding of loan cancellation and exemption. Take into account deferments or forbearance if you are unable to pay and want to postpone your payments for the time being. However, keep in loop your lender and preferably get a written notice that your loan payments have been suspended.

Leave a Reply

Your email address will not be published. Required fields are marked *


1 + three =