Money Counts
How to
Avoid a Student Loan Disaster
Its senior year and life is great
right now. The end is in sight, course load is a breeze and mom and dad don’t
mind giving a few bucks when cash is tight; but what happens after graduation? It’s
harder to get hired than you imagined and the bills are piling up. Student loan
payments are about to be due and you’re barely making rent as is. In all those
years of school why did no one prepare you for this?
Caitlin graduated from the
University of Missouri with honors. After taking a year off to travel, she was
about to begin her first semester of law school in Boston when she received
notice that her $15,000 loan application had been denied. Somehow lost in the
bliss of being a college grad Caitlin had overlooked the $300 Perkins loan she
received as an undergrad.
Not only can missing a payment on
your educational loans prevent you from getting into graduate school, it can
cause trouble further down the road as well. Missed student loan payments are
noted on your credit score and can ruin eligibility for home loans in the
future.
According to a 2011 study, the
average undergrad borrowed about $27,000 in four years of college. With the
economic downturn these numbers have obviously raised along with the average
number of years it takes to complete a bachelor’s degree (from four years to
five and a half.)
Student loan debt is hard to
shake once you’ve gotten into it. Even filing for bankruptcy won’t stop the
interest from compiling. So how does a student avoid drowning in the whirlpool
of borrowed cash?
Well, for starters always know
what it is that you owe. Keep track of loans taken out and interest incurred on
those loans so there won’t be any surprises after graduation and you can make a
plan for repayment. Sure it’s easy not to worry about it while you’re in school
and know you don’t have to make payments, but paying off the interest before it
is capitalized can take thousands off the amount you have to pay in the long
run.
This one may sound like common
sense but pay your loans on time! It’s easy to lose track when funds come from
various lenders but it is important to know who you owe and when you have to
pay them. There are plenty of deferment options for college grads and even debt
consolidation programs can be beneficial to help make ends meet. Lenders know
the drill; they will do what it takes to get their money whether it means
lowering monthly payments or other repayment plans.
Lastly, listen to the professors
and focus on your schoolwork. The better the grades on your report, the more
your financial aid increases. In addition, for every dollar earned over $2,500,
your aid is reduced by 50 cents. So killing yourself working three jobs and
barely passing eighteen credit hours will do much more harm than good.
