Friday, July 1, 2011

Handling Student Debt: 5 Tips for Future Students

So you’ve graduated from high school and are on your way to college. Congratulations! You will soon be experiencing the unforgettable: road trips, toga parties, and…student debt? If you’re not careful, the woes of college may overwhelm you and crush the perks of attending a top-notch university. College should be about learning, meeting new people, and having the best four (or sometimes five or six) years of your life. So, to keep things from getting too overwhelming, here are five ways you can crush the incoming student debt before it crushes you. 

1) Become Best Buds With Your Financial Aid Department
Sure, they seem intimidating from far away but up close they’re really not so bad. Within your first few weeks at school, schedule an appointment with your financial aid department. They can make sense of confusing topics like “Stafford Loan” and “Pell Grant” that make your head spin. They can also help you find scholarships, and tell if you’re eligible for various in-school financial aid packages. Some schools will offer scholarships to students who do well academically their freshman year. But the only way to find out is if you take the first steps into that office. The financial aid office can even help you with balancing your up-and-coming loan payments, and assist you with setting up payment plans. Cindy Bailey, a senior policy analyst at College Board even said, “I always refer people back to the financial aid people at their college. They’re the most generous, well-meaning people in the world. They want to be helpful to kids and their families.” So smack on a smile and talk to them as soon as you can. 

2) Consider Consolidating Your Loans
Consoli-whating? Layman’s Terms: Essentially, consolidating your loans means you combine all of them (for example, a federal, state and a private loan) into one lower payment. When you squeeze these together, your repayment time is extended. For those of you who either have several types of loans or who are having trouble making complete monthly payments, consolidation can be the right option. But, if you’re able to pay your student loan bill pretty easily each month, though, the best advice is not to consolidate. Have a chit-chat with your family or again swing by the magical financial aid office for further help with this issue. It’s definitely something that can keep you debt-free for a long time.  

3) Don’t Give In To Peer Pressure
Just Say “No”. Parents and mentors alike have been telling us this since grade school but it will never apply stronger than in college, I guarantee it. You’ll get swamped rich new friends who want to spend Spring Break in Cancun and the winter vacation skiing in the Swiss Alps. You’ll also get bullied by credit-card companies to sign up for their “perfect, unbeatable offers.” My advice? Don’t. If you know it’s too expensive, and that it’s something you’ll develop heart palpitations over, just say that you can’t do it right now. No one will judge you, and no one will think any less of you. Think about it. “No” is a two-letter word that takes a quarter of a second to spit out. Accrued debt is something that can follow you for the rest of your life. 

4) Avoid Shiny Things
We all know and love Kanye West’s music. Minus that whole Taylor Swift debacle, he’s pretty on-point with his stage presence and lyrics. But Kanye lyrics like “She don't believe in shootin' stars / But she believe in shoes and cars” need to be wiped from your memory when you first get to college. “Why?” You may ask. Because song lyrics like this make you want to spend. And while we do need to stimulate spending for the health of the economy, you, as a college student, are already doing enough by paying thousands of dollars to your school of choice. So when it comes to being a frivolous spender…Just don’t do it. College is expensive enough. It is a financial burden on both you and your family, and you don’t need to make it worse. So before purchasing the iPad 2 and Rock Band: The Beatles Edition, think about how much you really need these things. Chances are, you don’t really need it.

5) Find an On-Campus Job
Yes, few things are better than sleeping ‘til 4 p.m., partying ‘til 5 a.m. and never having to work a day in your life. It’s also delusional. Getting a job, especially one that’s on campus, can be a great way to make some extra money while not taking too much time away from your school work. And, when it comes to buying something you really can’t breathe without, this sort of part-time employment will really help you make payments and stay debt free. So try to pick up a few hours here and there at your local campus bookstore (they usually hire at the very beginning and very end of semesters). Working between classes or on days when you have a lighter course load can help you make enough money for those few things you really can’t live without. And, if you already have a credit card with monthly payments that need to be made, this can help you keep up a high credit score. Your career center (or it’s online site) will most always offer listings. 

You are about to embark on the adventure of a lifetime. College is going to be incredible, and is going to fly past you faster than a Boeing Business Jet. But be careful, because the consequences of getting bad debt in college are mountainous. More than that, they’re scary. You can end up losing out on a job, apartment, car loan or graduate school admission, all because you have outstanding debt. So, be careful playing with credit. It isn’t a game like beer pong and flip cup, and if you’re not careful, you can really lose out on post-grad opportunities.

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