Don’t Wait for Graduation to Pay Down Student Loan Debt
The numbers and amount of student loans in the US in 2019 are almost hard to fathom. It currently stands at $1.5 trillion and is increasing. Something all students and graduates have is a student loan. As many people will know, student loan doesn’t just start when you graduate, but as soon as you become a student and enroll at a university. This can be a scary thing. There are often horror stories in the news attached to student loans. It might be that a graduate couldn’t afford to make their payments, or that parents spent years of savings on their children’s education. To minimize the risk, here are recommendations to help you manage your student loan and stay away from any issues in the future.
- Have a clear budget.
The average, standard full-time three-year bachelor degree costs anything from between £20k to $50k per year according to the College Board. The average master’s student will pay roughly $20k. These figures don’t take into account things like accommodation and will depend a lot on which state the university is in. These things should be taken into account when you’re budgeting for your student loan. It’s vital to work out how much you’ll need for both your course, as well as room and board. It may then be useful to weigh up where you stay. If you go to a local college, this will bring your room and board costs down significantly. The real trick is only to borrow as much as you need. Take the time to plan out how much you’ll need for books, meals, and personal costs, as they can be easily forgotten. Once you have your budget, do your best not to go over it. You’ll need to pay back all the money you loan with added interest, so any savings you can make will benefit you in the future. For more information about budgeting your education, visit ELFI for many great resources.
- Start paying sooner rather than later.
If you have some form of income as a student, think about using even a small amount of it to start making payments on your loan. You don’t have to wait until you’ve graduated to make a start. For example, if you’re debating buying a new pair of shoes or new clothes, that come to say $40, think about paying this off your loan instead. If you pay just $40 off your loan each month, this will total in around $3000 by the time you finish your degree. Depending on the size of your loan, this may already be 5-10% of your total payments. The faster you pay off your loan, the less interest you’ll have to pay.
- It’s not a holiday.
While you’ll definitely have some great times at college, it isn’t a vacation. You’re there to learn and grow as a person. Try to keep this in mind, as it will help you both get the most out of the experience, as well as help to prevent you from spending all your money on partying and meals. These two things alone, when done multiple times a week, can add a significant amount to your debt. You can do both, but try to keep your budget in mind.