How to manage your student loan
According to reports in the US, student debt will this year amount to $1.2tn. In South Africa, the figures are lower but still present similar challenges. For example, student debt at the University of KwaZulu-Natal is reported to total about R220m, while R166m is owed by students to Unisa, indicating that similar financial challenges are faced locally in paying back student debt.
Consider your options
Wikus Olivier, Debt Counsellor at DebtSafe says, "Often, individuals find themselves having to still pay off a mountain of debt attributed to student loans when they should instead be at an age when they are paying off their mortgage or saving for their children's education."
"The increasing cost of education, alongside a lack of financial management skills, often leads to students finding themselves in debt once repayments on their student loans commence. It is therefore important for graduates who take out loans to be fully aware of not only the cost involved, but also the structure and repayment plan."
Olivier suggests that students consider their options before taking out a student loan. "Students can consider scholarships/bursaries, as unlike student loans, these do not need to be repaid. It is also important to understand the terms of the loan, i.e. questions such as: 'Can I get a lower interest rate?'; 'What will my monthly repayments be?'; and 'How much will this loan be in total?'
"Once you have chosen the most appropriate loan for you, there are a number of factors that if implemented correctly, can assist you in either avoiding or paying off student debt quicker once you have entered the corporate world."
Here, some tips on managing your student loan effectively:- Work out how much is enough
Borrow only what you need when taking out your loan. This includes determining how much money you need to cover your student costs, academic material, your cost of living and your family's contribution. You do not have to accept the entire amount of the loan that you are offered. "If you manage to get a student loan be sure to use it for what it was intended. Do not use it to pay for all sorts of other stuff, or splurge it on unnecessary things," says Olivier.
Draw up a budget as soon as you have graduated that includes the monthly repayments you need to make. Budgeting will ensure that you not only know where your money goes each month, adding structure, but also that you remain within your financial means. Budgeting will enable you to factor in regular payments as soon as you start earning a salary, preventing your debt from growing to uncontrollable amounts.
Don't just take the first option to come your way. Shop around for cheaper rates and be prepared to negotiate.
This will ensure that you do not have to borrow as much as you originally intended. Tutoring, bartending or being a waitron are all ways of making extra cash to ensure that your basic needs are covered.