It is not a secret that thousands of college students will graduate with a degree plus thousands of dollars left unpaid on their student loans for college. Statistics prove that student loan debts are estimated to run from $10,000 to an astounding $50,000 posing a huge financial challenge to newly graduated students who are just about to start looking for jobs.
To avoid being stuck in a debt situation, how can you as a college student avoid bad credit at all costs? Here are some advices worth considering:
Choose your student loan carefully. If you plan to obtain a private student loan, research extensively for a lender that offers the most reasonable rates and terms in the market. Don’t rush into signing up for a private student loan just because of attractive advertisements. Be sure that you understand what you’re getting into. Check the interest rates and costs that come with your loan. More importantly, understand the terms and conditions of the loan.
Consider a student loan debt consolidation
If you obtained two or more loans consolidation is recommended. Most federal student loans are not enough to cover all college expenses so students apply for a second loan from private firms. To keep up with your loan payments more easily, signing up for a student consolidation is a good strategy. It enables you to lower your interest and eliminates the need to juggle your monthly payments.
Use your student credit cards with caution. Student credit cards are wonderful additional support for a student in college. But because credit cards are so easy to use, many young people forget to exercise control. Some students use their credit cards for personal luxuries or unnecessary expenses. Because of high interest rates of student credit cards, they can easily get stuck in unmanageable debt.
Be aware of your financial responsibilities. Be especially aware of your payment schedules as late payments can cost you additional charges that could’ve been avoided. Don’t forget that you will incur high interest on your student credit card if you fail to pay off your balance on time. Add the late penalty fee and you’re adding up more costs to your budget.
Be frugal. Ultimately, avoiding bad credit depends on your spending habits and lifestyle. Learn to allocate your monthly allowance effectively. Prioritize your expenses to make sure that you’ll be able to pay first the most important costs on your list. This will help you avoid splurges or unplanned spending. Create a written monthly budget plan and don’t forget to stick with the plan no matter how difficult it seems.
Save, save, save. Are you saving for the rainy day? Keep the habit of saving your money every time you have the opportunity to do so. Each month, set aside a portion of your budget for your savings. Even if you have a student loan or a student credit card to count on, do your best to save so you can be financially prepared for emergencies.
About the Author
Samantha Wilson is a consultant for managing credit cards and finding the best student loans. For years she has written student credit card articles that helps build student credit, and student loan help articles that can be used as guides to handle student loan debt.