Late last year, the Huffington Post reported that in 2010, the average student loan debt in the USA was $25,250. I’ve read many stories of students completing their undergraduate education with over $50,000 USD in debt. Personal finance and how to manage student debt should be a compulsory “course” at all colleges and universities. Failing that, there should be an effective financial counselling programme which provides financial advice to all students.
How to Manage Student Debt
Managing student debt starts with the right mindset. One of my best tips is to start managing even before you sign on the dotted line for school. To keep your finances manageable and manage student debt, you should:
- Look for free money
- Create a financial plan
- Understand your loan
Look for Free Money
Scholarships, assistantships, grants, financial aid and co-op programmes are some of the options available to students. The key is to start your search early. Hundreds and sometimes thousands of students apply for these opportunities which are usually limited to specific numbers.
Create a Financial Plan
Yes. The financial plan a.k.a the budget, can be applied to almost any financial situation and is a great tool for deciding how to allocate your funds. Some examples of items that come to mind are room and board, meals, tuition and books. These are the first items that you should aim to allocate your funds to. Remember to keep your needs and priorities in mind.
Understand Your Loan
Before you sign on the dotted line, make you that you read the fine print and understand the intricate details of your loan. Gather as much information as possible and ask questions. If I had to get a student loan, some of the things I would ask about are the monthly payments; how soon would I have to make payments ( immediately or after I graduate); the interest rates; what happens if I default; and what options are available if I do not get a job right after graduation.
I’ve never had a student loan for my studies, so for the most part, I’ve avoided some financial struggles. However, I have a few friends who have had to get loans to finance their studies. All of them were pursuing graduate degrees overseas and financing their studies through loans was a viable option. My take on it is that you should manage your debt as best as you can and make it a priority.