Taking on debt can be daunting. But if you borrow intelligently – planning out how much you should borrow and your ability to pay it back – an education loan can be a smart investment in your future.
Borrow wisely and repay conscientiously
Education Planing
Borrow only what you need. Remember you can always take a smaller loan than what the lenders have to offer.
o Before borrowing, prepare an estimate of a year’s expenses for college
o A good approximation is that your education loan payment should not exceed 8-10% of your post-college anticipated income.
o If possible, shell out the accruing interest on your unsubsidized federal loans and private loans while you’re still in school.
o Be punctual with repayment! When you pay your education loans on time, you avoid late fees, protect your credit history, and prevent yourself from defaulting on your loan.
Prepare a budget
Budgeting is the foremost step to good money management.
o Set goals. Plan for expenses, like buying a car, in your budget.
o Create a “spending diary” to track every purchase you make.
o Always keep a note of income (what you earn) versus expenses (what you spend).
o Cut costs whenever possible. Buy used textbooks, cook at home rather than eat out, shop at sales, and use public transportation. A penny saved…
Avoid defaulting
Here are a few tips to keep you out of the red:
o Graduate. A college degree translates to a higher paying job and makes loan repayment much simpler.
o Inform your lender if you realize you can’t make a payment, and discuss your options.
o Clear other debts during the period after you leave school and before your first student loan payment is due.
o Make extra payments. You not only reduce your loan balance quicker, but also reduce the amount of interest you’ll have to pay.
Education Loan
Related Posts
RSS
Directory
