In fact, the average student today graduates from college $30,000 of student debt. But what’s really troubling is how these student loans are being used.
According to Student loan hero:
Student loan debt is quickly reaching crisis proportions in the United States. But how is that money spent? You might be surprised to learn that student loans don’t just finance tuition and textbooks. According to our recent research, college students use their student loans to finance everything from cell phone bills to new clothes and beer.
Nearly 60% of student borrowers have no idea when their student loans will be paid off and more than half of all borrowers have no idea what their monthly payments will be when they graduate. When you combine these facts with falling wages and rising home prices, many people will find that they simply cannot make ends meet.
The good news is that there are ways to keep student loan costs to a minimum. By being disciplined and budgeting only necessary expenses, you can avoid paying too much for seemingly innocuous purchases. For example, if you finance a pizza every Friday night for four years, an $1,800 expense turns into $2,291 after accounting for the associated interest payments over time. Students can also pay part of their study costs by working part-time.
Unlike many other debts, student loans can never be discharged through bankruptcy. So it is important to pay them off as quickly as possible. One of the best ways to do this is to make payments while you are still in school. After you graduate, you then make additional principal payments. Also take advantage of automatic payments to avoid late fees.
Photo credit: Zero Hedge
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