Education Loan
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
Borrow only what you need. Remember you can always take a smaller loan than what the lenders have to offer.
โข Before borrowing, prepare an estimate of a year’s expenses for college
โข A good approximation is that your education loan payment should not exceed 8-10% of your post-college anticipated income.
โข If possible, shell out the accruing interest on your unsubsidized federal loans and private loans while you’re still in school.
โข 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.
โข Set goals. Plan for expenses, like buying a car, in your budget.
โข Create a “spending diary” to track every purchase you make.
โข Always keep a note of income (what you earn) versus expenses (what you spend).
โข 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:
โข Graduate. A college degree translates to a higher paying job and makes loan repayment much simpler.
โข Inform your lender if you realize you can’t make a payment, and discuss your options.
โข Clear other debts during the period after you leave school and before your first student loan payment is due.
โข Make extra payments. You not only reduce your loan balance quicker, but also reduce the amount of interest you’ll have to pay.