Student loans…While simple in its definition, these two small words play a large role in the financial and future stability of a freshly college graduates. It is estimated that more than 55 million working Americans, roughly between the ages of 18 to 35, do not have access to a financial retirement plan. Though many of these individuals are making an adequate annual amount, much of their money funnels to their educational expenses such as student loans than to their retirement savings. To prevent this problem from happening, college students need to be financially aware of how to manage their student loans.
When dealing with your student loans, you need to be realistic. Yes it may seem that they are like a godsend when you get them. But without a critical action plan, your loans can grow to be an impossible financial disaster. This can lead to sever and negative ramifications later on in life as you try to pay off these debts. At times, your loans can grow to be tens of thousands of dollars. Unless you have a financial backing, paying this of will often result into longer work hours and low cost of living,
To prevent this type of situation, here are four vital tips you need to properly manage your student loan expenses. Remember, by graduation time, you want to begin your career with an open mind, not with an open wallet.
1. The More You Pay, The Less You Owe
If you have the will and the means to afford your college tuition in an annual way, try treating your student loans like you would with a mortgage on your house. Pay it off in large sums. This tactic is beneficial in various ones. First and foremost, the more you pay, the less you owe. But beyond the simple concept of borrowing money, you have to conceptualize the financial interest your loans are accruing each and every year. The faster you are able to pay your loans, generally offered at a lower interest rate in the beginning of the process, the less you will have to owe years down the line. One of the biggest flaws many college students make is that they do not account for the mounting interest that attaches itself at the end of your college career. If you have a way to pay it off, do it!
2. Create a Financial Plan
The minute you walk away from your alma mater with your cap and gown dazzling in the sun is the day you are reborn into the real world. One of the most important things you need to realize is that you need to create a financial plan. Usually student loans are long-term. That means that you will be paying them off from anywhere between ten to twenty five years. When this happens, you may start to feel like there is no end to sight. Don’t worry! To ease your mind, start off by creating a long-term financial plan. In your plan, take note of the amount of expenses, especially your college loans that will be taken out monthly. Compare those numbers to your overall revenue and begin planning specific financial goals and financial milestones that you want to reach within a year (five years, ten years). By creating a plan holistically you will be able to tackle your expenses confidently while also planning strategically for the future.
3. College Loan Repayment Funds
Especially in this time, try and find any financial plans available to help you pay off your debt without any hassle or interest. Similar to the IRA, students can deposit money into these accounts whenever they can and these debts can be paid off as long as money keeps coming into the accounts. All you need to do is deposit small amounts every week and you should be fine for the month.
4. Part-Time Job
If you are planning on going to college or are in currently enrolled at a university, you should consider getting a part-time job to help save up for your student loan payments. This is definitely one of the best ways to future proof your college finances and ensures your student loan repayments will be stress-free. Many people often do through the university through work-study programs. If you are unable to sign up for one of those programs, try looking around locally for any part-time position. If possible, utilize your own skills and traits as a resource for income such as tutoring.