Student loans can either help you or ruin your chances of success. Learn how to use them properly and how to keep them in check.
Student loan debt is one of the most serious problems in the US today. According to a news report published by The Economist, a multinational media company specializing in international business and world affairs, the total amount of student loan debt in the US exceeded $1.2 trillion in June 2014 with 7 million out of the nearly 40 million borrowers in default.
Aside from having their credit trashed, these people run the risk of becoming ineligible for some government jobs. It may even ruin their chances of being hired by many employers and may cause others to lose their professional license. And since about 60% of employers run credit checks before hiring or promoting, getting a higher paying job to repay their student loan debts becomes next to impossible for most Americans.
Tips to Minimize Your Student Loan Debts
Recognizing the severity of the situation, you need to learn how to borrow wisely for college to avoid running into some serious problems in the near future. Here are some tips that can help you do just that.
Take only what you need. Aside from your tuition, you also need to consider other expenses such as books, housing, meal and transportation to come up with the total amount needed for college. Make this task easier by using the online net price calculator provided by your chosen college or university. Take only what you need and resist the temptation to take excess loans.
Understand your loan. Know the repayment terms and the amount of your monthly loan payments. To get a more accurate idea, use the Department of Education’s repayment comparison calculator.
Consider other funding sources before applying for student loans. Look into college scholarships and higher education grants, and utilize any college savings plans before taking out a loan. Consider federal loans first since they are cheaper and offer more affordable repayment terms.
Live frugally. Find affordable housing and limit living expenses whenever possible. If living on campus, try not to have a car since the cost of insurance and maintaining the vehicle can add up quickly. Think twice before buying anything with your student loan money.
Seek out advice. Consult the experts (including the school’s financial aid office, your parents, and other college graduates) before signing on the dotted lines to make sure you are making the right decision.
Graduate earlier. Obtaining your Bachelor’s degree in less than four years can help you save a considerable amount of money so take more courses than normal. Also take summer courses whenever possible.
Start paying the interest. While you don’t need to pay the loan interest while you’re still in school, doing so can help you save a lot of money. Working part-time during the school year and full-time during summer or starting a low-cost side business can help you earn the money that you need to start paying off the interest.