Are You Drowning in Student Debt?

Most students graduate with a substantial amount of debt. Higher education is a rationale reason to go into debt as it is sure to ultimately benefit your income in the long run. But with the rising tuition costs and bleak job outlook graduates are having a harder time paying off their loans. So what can you do if you’re in this situation? It’s easy to try and delay paying off your student debt. Student loans are usually pretty flexible in their payment plans and it’s easy to contribute the bare minimum towards paying them off. If you’re in an extremely dire situation however you should consider putting student loans at the front of your to pay-off list because you can’t declare student loans in bankruptcy court as you can most other types of debt. Moreover after a certain amount of time passes since graduating it’s likely that the interest rates on your loan will drastically increase. The Wall Street Journal showcased individuals who most commonly began to feel the weight of student loan debt around the age of twenty-eight. A few simple steps can help to get the ball rolling in the right direction to prevent this sudden shock to your finances. First and foremost you should take inventory. Figure out just how much you owe and when it is due. If you have a number glaring back at you you’ll be much more likely to take action. Often we think we cannot possibly owe as much as we do until we crunch the numbers. Once you’ve taken inventory of how much you owe you should create a budget. Figure out how much income you are taking in and how much you owe. You’ll also need to calculate in your other expenses such as food, rent and utilities along with you’re other forms of debt. When creating this budget you should aim to pay off high interest debt first as those are the most likely to get away from you and sky rocket in amounts. It’s also a good idea to create this budget while still in school if possible. That way you can begin talking with your lender about your situation before you graduate. You’ll also be graduating with a plan and will thus begin handling your finances with greater diligence. Another thing you can do while still in school is work over summer. It can be hard to hold a job over the school year, and even if you manage to do so your hours will most likely be fairly limited. By working over summer you’ll ideally be able to put some money towards your savings and thus ultimately towards paying off student debt. Even after graduating it is important that you set aside some cash for paying off your loans. You should also research and take advantage of all of the benefits that come with your loan. Find out when interest starts to accumulate, what options you have and if their are benefits to paying off the loan in a certain way. Once you’ve figured out these benefits and created a budget don’t delay payments, some months are bound to be tighter than others but do your best to stay on the straight and narrow. Delayed payments can lead to some very serious costs. Michelle Singetary of the Washington Posts echoes most of this advice and recommends students with debt buy the Cliff Notes Book on Graduation Debt. In short don’t put off student debt and explore all of your options. Debt can be very scary and thus many of us want to run and hide from it, but if faced head on you are likely to encounter fewer problems.