Thursday, 18 April 2013

Tips for Student Loan Debt

When students graduate from college, they're hit immediately with bills from various angles. Look on the reality that the average college graduate has over $3,173 in credit card debt alone! More than that, the national student loan debt average is approaching a historic high of $30,000. While students can eliminate unbearable credit card payments through bankruptcy, there is little room for forgiveness with this kinds of debt.

What's even worse is the fact that the economy has yet to fully recover. The fact is, the unemployment rate for new college graduates can be short of 11 percent and its also reported that wages have decreased approximately 3.6% across the nation. Plus these statistics and rising student loan debt, young adults are finding themselves in a precarious situation. Since filing for bankruptcy won't alleviate loan pains, it's crucial for young adults to handle their money wisely.

Tips to Budget for Student Loan Debt

Student loan debt payments tend to have a long-term effect on credit history, budgets, and quality of life. By incorporating these tips, current college students and new graduates have the opportunity to manage their debt before it gets out of hand. These tips may also be used on other debts such as credit card debt to keep away from financial troubles. Young adults should:

  • Anticipate upcoming expenses. It isn't sufficient to simply plan for debt payments. Take into consideration entire picture including car, rent, groceries, leisure, and any other expenses. For young adults still in college, now should be the good time to start with saving for a down payment on your future apartment or car. By worrying about it now, you can surely focus on student loan debt later. Saving for anticipated expenses also enables you pay in cash instead of putting it on a credit card, which will protect you from the need for bankruptcy.

  • Maintain strong communication with lenders. If you know you are going to miss a payment or are really in a financial hardship, it's much better to contact your lender and ask for a deferment, forbearance or any other options than to miss a payment.

  • Avoid paying student loan debt by using a credit card. For many young people struggling financially, there is the temptation to pay bills with a credit card. However, this only pushes over the eventual payment instead of actually paying it. Credit cards are going to have aggressive interest rates that accumulate quickly. Paying student loan debt with a credit card isn't a solid money management strategy and will cause further financial trouble down the road.



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