The ever-increasing price of tuition fees for pursuing higher education has become a burden that parents and children constantly worry about.
Many governments offer subsidies and loans to help cover the costs, but education debt is still a rather big issue for students worldwide.
If you too are bogged down with worry over a student loan you’re about to take, here are some measures you can take to ensure you are able to repay it in as responsible a way as possible.
1. Plan a budget before applying for a student loan
• Make two lists: Your first list should include all your sources of income, and the second should include all your expenses. Sources of income may include things like employment, grants, scholarships, work-study income and contributions from relatives or friends. Whereas expenses might include tuition, books, supplies, housing and food.
• Calculate your total income, expenses and compare: If your total income and available savings are less than your total expenses, review your list of expenses to check for ways to reduce your spending and to eliminate unnecessary expenditures, if any.
• Now, compare your total income against your expenses again: If your total income and resources are still less than your expenses, consider taking a student loan.
2. Read all the fine print when applying for a loan
• Ask questions and follow instructions
Make sure you’ve done enough research before you finalise which student loan to take. Don’t be afraid to contact a financial aid officer for answers. And, ensure you understand the rules and requirements before applying. Funds can be limited, so be sure to apply before the deadline.
• Be clear about what you’re signing
To make sure you understand a loan’s terms, conditions and repayment requirements, ask your financial aid officer the following questions:
– How much will this loan cost in total?
– What will my monthly payments be?
– Is the interest rate fixed or variable?
– Can I get a lower interest rate?
– What else do I have to pay for?
- Take special note of private-loan credit requirements
Private loans require credit checks. If you do not have a credit history, you will need a co-signer with a good credit history and credit score. Typically, the better the credit history and score, the better the interest rate and other terms will be.
3. Be diligent when repaying the loan
• Keep track of your borrowings
It is important to keep track of all your loans so that you are aware of how much you will be paying each month as well as in total.
Don’t wait until you graduate or stop attending school to review your student debt, because if you do, you may find you have borrowed more than you can afford to repay or have multiple loans that require separate monthly payments.
• Consider working part-time
Most tertiary education offers a more flexible schedule than secondary education. If you are fortunate enough to have such flexibility, you can choose to work part-time to make some extra money.
The possibilities are endless, from working as a freelance writer, waitressing to working ad-hoc for events.
You won’t need to borrow as much if you have a part-time job to cover some of your expenses. You should check out if your university offers work-study programmes as well.
• Consider making interest payments while in college
You can start paying off the interest while you are still in college. You don’t have to pay a lot, and this will allow you to reduce the total amount of student debt you’ll have to repay later.
This article first appeared in The New Savvy.
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