How to deal with student loans

Jamie FrankfieldDebt has several faces. Some people face prolonged debt periods, while for others, debt appears in the form of a short-term loan from a financial institution and for others still, it is not more than a minor sum of money borrowed from a friend.

Among the people who face long-term debt are students. It is surprising because students are normally so young, so how could they have accumulated debt already? And yet, it is accurate for most parts of the world where student loans are a common occurrence. These are basically loans that students can acquire to help pay for their college tuition, books and paraphernalia, and living expenses. They are different from other types of loans because they entail a relatively lower interest rate and do not require repayment while the student remains in school. Such loans, however, differ from country to country due to the varying laws and regulations around the world.

Student loans, although helpful during college years, can turn to be a burden quite cumbersome to carry. As students progress in life, responsibilities increase and if the burden of a student loan is added, then debt leads to a life that can get a bit arduous. Therefore, many of them would like to reduce their debt as soon as possible. Following a few ways in which student loans can be dealt with:

Don’t waste your grace period

A grace period is the period over which the lender doesn’t require you to pay back your loan. This could be right after college when you begin working. Take advantage of this time and do not forget about your responsibility towards this debt. In fact, take this time to set aside money that you can use to pay off your loan in installments.

Be aware of your loans

bewareOften, it is normal for a student not to be aware of all of the loans they’ve acquired over the years. Hence, the first step is to check your balances and the amount you owe and to whom they are owed. Next, you need to plan how you intend to make payments. Many loan programs offer several payment options including payments based on your current earnings. For students tackling multiple loans, it is advisable to first pay the ones which require higher interest payments every month. It is also good to keep a check on the minimum payments required on each loan and for which ones a deferred payment or loan forgiveness stands to be a possibility.

Don’t give up the simple life

Now that you’re out of college and have a job, it does not mean you should live beyond your means. Keep in mind that you still have to pay your debts. Therefore, look for affordability when it comes to major purchases such as an apartment. Cut unnecessary expenditures and save up whenever possible.

Don’t take on new debts

Make a budget and stick to it. Ensure you do not plan any expenditures which involve taking on more debt. Examples could be a wedding or a new car. Make such purchases only if you can afford to do so; otherwise, they can wait.