Rates On Student Loans Just Went Up – How To Manage Student Loan Debt

With the onset of July, 2014, students will have to pay higher rates on their federal student loans in the approaching school year. According to recent reports, undergraduates who will borrow new Stafford Loans will have to pay a rate of 4.66%. The rates on Stafford loans were 3.86% in the school year 2013-2014. Interest rates have been set for the next academic year and hence the new rates will be applicable since 30th June, 2014.

With the increasingly large number of students who are struggling with an unprecedented amount of student debt, it is becoming dangerously impossible for them to pay back their student loans even after they’ve landed up with their respective jobs. What kind of financial advice would be appropriate for such hapless students who are overburdened with the weight of student loan debt? Read on to know some worthy advice.

Dealing with student loan debt – How to pave your way out of it

Understanding the significance of the 4-letter word ‘debt’:

Being a student in the US, you have to be blessed with all the smart ideas of dealing with student loan debt as there is hardly any student who doesn’t owe debt on his student loan. Hence, it is mostly important to chip away the present debt instead of piling on more. The most important factor that you have to keep in mind in order to achieve financial success is to never finance consumption with debt. Don’t go to restaurants and pay the bill with your credit card. While the use of debt should be minimum, apart from education, the only 2 purchases that can be made with debt are housing and transportation. Make sure you don’t fall in debt due to short-term consumptions.

Realizing the need to learn delayed gratification:

As we know that the average graduate with debt in 2014 is almost $30,000, one shouldn’t spend too much money on things that you don’t need now. The very moment a graduate starts earning money, the cash flow in his pockets is certainly more than before and hence his expenses also starts soaring out of control. Spending huge amount of cash on a big loan, a sports car or going out for a fancy vacation should be postponed in 2014. Instead of spending money on such expenses, remember that this is the time to take stock of exactly how much you owe on each of your student loans. This is called delayed gratification. Although students don’t approve of this much, yet this is important.

As far as your student loan debt is concerned, you should pay off your college debt as soon as possible. Even when the job market isn’t showing any remarkable improvement, one should work hard to line up for good jobs these days. Once you grab a good job, you should plan your finances accordingly and keep aside money for your student loans. Start contributing money to your retirement account to secure your golden years. Don’t wait to be counted among those who retire with their student loan debt.

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