With the rising cost of education, it should come as no surprise that student loan debt is quickly becoming the most prevalent type of consumer debt in Kentucky and Indiana, surpassing even credit card debt. One of the most devastating facts about student loan debt is the ease with which lenders make these funds available to students, especially given the increasingly difficult job market for new graduates. As a prospective college student, one should avoid the temptation to borrow a significant amount of money just because it is there for the taking. This is not free money and has to be paid back at some point. Here are a few tips to keep in mind when looking to finance a college education:
1. Minimize your expenses. If you are attending a local college or university, consider living at home in order to cut down on the amount you have to borrow, or at least get a roommate to share living expenses.
2. Explore all opportunities for grants and scholarships before borrowing money. Check with your high school adviser about possible opportunities. There is also a wealth of information on the internet. There are science fair competitions, essay writing, and other contests that you can enter to possibly win scholarship money for school. Hey, this is free money so why not see if you can find it before going into debt.
3. Create a budget. Make sure that you know each month what you can and can’t afford and stick to the budget. Avoid using high interest credit cards to pay for things that you don’t need.
Over 10% of college students drop out of college because of credit card problems. For many of these young kids, that means they are left with student loan payments, credit card payments, unpaid tuition bills, and an unfulfilled academic career. In an already sluggish job market, many of these kids end up unemployed and back “at home”, negatively affecting the financial affairs of their parents.
Regardless of the type of debt you have, inability to pay your bills has an adverse affect on your credit rating. Your credit score can have a direct affect on your ability to own a home, obtain a job, purchase a vehicle and other credit matters. Understanding debt, credit and the importance of your financial reputation is a valuable lesson that can help young people create healthy spending and saving habits at an early age.