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Watch Those Student Loans

Student Loans can be a blessing and a lifetime burden if you don't manage them carefully.  Many students today get everything they can out of student loans with no regards to what it is going to take to pay them back in the future.

Student Loan Debt has increased by around 6% over the last year alone.  If you put this together with a weak economy and a very slow job market then the outlook is grim for many of our young people today.

Many students use the money from student loans not only for tuition but for housing as well.  Once they graduate then they are saddled with enormous debt.  You can get your loans deferred for a while but eventually you will have to start paying them back and that will take a bite out of your income.

A college education is important in this day and time but try to reduce your use of student loans as much as possible.  Work every summer and use that money toward your college expenses rather than depending on a bigger loan for next year.

Consider living off campus with your parents or relative rather than expending so much money on housing and meals at the college.
Get a full time job and take college courses at night.  It is tough to get a full four year degree with just night courses, but you can save some to help with full time expenses when you decide to finish up and get your degree quicker.

Try to arrange your courses so that you are able to get your degree in less time; say 3 years instead of four.  This will save on housing and other expenses.

Once you have graduated, President Obama has announced some new measures that are aimed at making student loan debt easier to repay.  A part of these measures that he has proposed are capping loan payments to 10% of a borrower's income and offering debt forgiveness after you have made 20 years of payments instead of the present rule of 25 years.  The rules, however, only apply to federal loans.

Another way to help with your student loan repayments is to get all your loans consolidated into one loan with one payment that will most likely be less than the total of all your single payments on several different loans.  Most banks or credit unions can help you with a consolidation loan.

For the benefit of your credit rating, it is important to either have your student loans in deferred status or to be making your student loan payments on time.  Also, know that student loans are one of the debts that cannot make go away by filing bankruptcy.

If you are new to college and student loans take time to figure out how much money you are eventually going to borrow throughout the life of your college education.  Learn what your payments will be to pay off this debt.  Think about what your "take home" income is going to be and what other things you will need for that income to pay like rent, utilities, car payment, insurance (health, car, home or rental), cell phones, internet service, groceries, eating out, entertainment, having a baby, etc.  Making student loan payments will only take away from the money needed for these other life items.

The lesson here is don't depend on student loans any more than you absolutely have too.  Debt is debt and it must be repaid or you will ruin your financial credit rating which will impact your future credit purchase; like a new car, new home and today can impact even the job offer that you receive.



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