Is your college debt a constant source of anxiety for you? Are you struggling to keep the student debt to a minimum? Don’t worry, we’ve compiled a list to assist you with your student debt management.
Given the burden of debt already incurred, students are unable to purchase a house or pay off mortgage after graduation. It is essential to manage student debt early on because it might cramp your financial life after graduation, consequently leading to further hardships.
The only two ways you can minimize and manage debt are: lowering expenses and finding newer revenue streams.
The following steps will assist you with debt management.
Look For Cheaper Study Options
College expenses can be a huge drain on the finances. That said, there are various less expensive study options that can be explored. Online education is one of them.
Although it might have been considered a less viable option many years ago, it now is considered an option well worth it, if not downright necessary in certain situations.
But what if you have to import your course materials. What do you do then? Surely, the global supply chain has become more interconnected and expansive, but what about unforeseen delays along the global routes?
This has necessitated the need for customer service in supply chain management and study programs in supply chain management now stress on the question of How Customer Service is Important to Supply Chain Management because customers have a right to know the details about their shipments.
Factoring in all of these foreseen and unforeseen issues, you should be able to land on a viable course option for your studies that doesn’t break the bank in the process.
This should include looking for options that best suit your family budget and savings. Although a less expensive college may not be as glamorous as a more expensive one, choosing a less expensive college will help you manage your student debt significantly.
Transferring halfway through your degree to a better institution is still an option that will help you balance your costs. The amount of money borrowed to pay for tuition will be manageable and, hence, easier to repay.
Taking out a student loan to cover the tuition costs should always be an option of last resort, as the cost of attending college has greatly increased over the years. The amount of debt one must incur to fund the college expenses can land you in an inescapable crippling debt.
You should instead look for a plan that allows you to pay for college in installments. Before taking out a student loan, other student grants and scholarship possibilities should be explored.
Make a Plan
First and foremost, you need to have a plan of action that you can follow right till the end. You need to calculate the payoff amount on a student loan so that you can devise a plan for managing and repaying that debt later on.
Loans have different interest rates, repayment terms and grace periods, all of which need to be taken into account when making a repayment plan so as to avoid any unforeseen additional costs. Some loans have a grace period of six months, while others have a repayment period of up to nine months.
You need to start saving in order to meet your college expenses which should not only include your tuition fees but also your transportation fares and living and food expenses.
Savings can assist you in reducing your incurred debt and the amount you have to pay in repayments. Setting and sticking to a budget will make things easier when saving and managing expenses.
You should spend wisely that which you borrow. You must not borrow in excess to your needs and keep a strict tally of the amount borrowed.
Because private loans have higher interest rates and are less flexible than federal loans, taking out a federal loan is a smarter choice.
You might also want to take into account your expected future salary—the goal being that you want to owe less than what you may expect to be earning after graduation.
Preferably, the amount of student loan debt should not exceed your estimated first salary. You may also do well in reducing your overall costs by buying used books instead of new ones and staying at home rather than staying in campus dorms.
Repayment of Debt
The best debt repayment strategy is to start paying off loans with the highest interest rates. This helps to minimize long-term debt, making the repayment process easier.
Prepaying loans is also a strategically advantageous method as it helps reduce the debt stack. The faster you pay off your loan, the lower your interest rate will be.
Many federal loans come with deferment periods, which if you are unemployed for a while, can facilitate you to pay at a later date with no additional interest.
A monthly automatic deduction of a certain amount from your account for debt repayment purposes also benefits the borrower, as many lenders give interest rate discounts in this case.
You might also consider consolidating your debts. Consolidating your debt entails combining all of your debts into a single huge loan. This will allow you to extend the period by which you have to repay the debt.
Before consolidating loans, make sure you’ve thoroughly assessed interest rates and chosen the option with the lowest interest rate. It should be noted, however, that if you choose consolidation, you will lose your deferment period option.
If you can strike a balance between working and studying then you must consider the option of taking up a part-time job to help you pay off some of your student loans.
Technological advancement has made it a lot easier for students these days to work alongside their studies as there are a lot of online opportunities for earning a side income.
From content creating digital platforms like YouTube to the more traditional freelancing options, there are a range of high-earning opportunities available. You can also look for on-campus paid gigs that can help you pay for your living expenses.
You might be able to get some help in the form of loan forgiveness or cancellation. This option is only available under certain conditions, but if you satisfy the requirements, it’s the quickest way to relieve yourself of debt.
Loan forgiveness can be considered only after a set number of payments have been made. You may be released from paying the loan if paying for it is causing you to go bankrupt.
Other grounds under which loan forgiveness can be sought are: school closures before getting the degree and being disabled or handicapped.
Certain programs, such as the Pay As You Earn Program, may also assist in loan forgiveness. Working in a public service profession, such as teaching, may also improve your chances of getting your debt cancelled.
The rising cost of college tuition is alarming, to say the least, but there are numerous ways you can minimize incurring crippling debt, or altogether sidestep going into one if you are smart with money.
Look into federal loans rather than private ones, as the federal loans come with lenient deferment options and lower interest rates, both make it easier to repay debt.
Start looking for paid gigs, freelancing opportunities, or on-campus paid internships, to help you pay off living expenses. Also, explore loan consolidation, loan cancellation, and even bankruptcy if push comes to shove when repaying.
Being in debt is a bad place to be, but taking proactive measures can drag you out of the quicksand of debt sooner.