Students who fall in to the debt trap with student loans are often unaware of the long term implications that await them in the future. At the age of 18, there are far too many things going on the youngster’s mind and debt repayment is definitely not among them.
But sooner or later, everyone who has availed of a loan must learn to deal with the effects. Here are a few tips that will help you manage your student debt better and in an easier way.
Understand the figures
You have to sit down and make sense of all those numbers if you really want to get out of the debt trap soon. First of all, take a look at your monthly loan payment amounts. If this amount adds up to just 20 % of your entire monthly budget, then the chances are higher that you can successfully manage your debt well.
If the figures are higher, and form about 20-30 % of your total monthly budget, then you will still manage the debt well, but may need a little bit of effort then and now.
The worst case scenario is when the installments exceed 30 % of your monthly budget. In case such a situation develops, go on and see if the next tip works for you.
Work Around the Obstacles
In case such a situation develops and you find yourself struggling to pay the installments on time and in full each month, you should not lose all hope and give up entirely. Doing such a foolish mistake will not only get you labeled as a delinquent but also will scar your credit report for a long time to come. That is why sites like Wonga.co.za (or one of their sister sites if you’re not based in South Africa like yours truly) that offer loans without the least hassle strongly advise you against taking out their loans if you cannot afford to repay them or do not fully understand your contracted obligations.
Instead of that, you should approach the bank and inform them of your predicament. Take advantage of the income based repayment program which will reduce your installments to around 15 % of your income.
But the perks come with some bad effects too like extension of the duration of the loan to 25 years. This means that you will now be paying more interest over a prolonged period of time, but when you are at a risk of facing delinquency, this option is the best alternative.
Chart a Clear Plan
Now that you have got the bank to reduce your installments, you will have to find some income to support the timely payments. Look around and find some jobs that you can do in the free time when you are not busy studying or attending college. The best option for busy students to make some money is to take up freelancing work.
You can either work on the weekends or work at a time that is convenient to you. Students usually prefer working for a couple of hours at night, when there is no one to disturb them at all. Remember to save the money that you earn and use your savings to pay the installments on time.