High School surely taught you all those trigonometry formulas very well, along with all those chemical organic reactions. You still have the periodic table on your fingertips, right? But, here we need you to do some thinking and answer the next question – How well did high school prepare you financially – to pass the exam called Life? To manage your education loan while you are still in college?
Table of Content
- 1 1. Gather all the free financial aids before getting a student loan.
- 2 2. Choosing best student loan for a college education.
- 3 3. Make a college spending plan and STICK to it.
- 4 4. Why not pay out your education loan NOW?
- 5 5. You should start building credit for the future.
- 6 6. Steer clear of financial predators.
Handling finances is an art, and not many master it during their high school days.
This does turn out a little difficult for people, because most of the college goers learn their money managing lesson the hard way. High school may have prepared you for college academically, but you may be less ready to handle your money, especially if you need student loans.
Be it taking care of the money you get through internships, or applying for scholarships manage to student loans, you should really know it all as an individual. According to a latest survey, more than two-thirds of college students at all levels said that they feel stressed about their personal finances.
However, we are right here to ward off all your money related problems!
We exactly know what you want at this point of time, so we have put together some financial best practices that would help you manage your student loans and pay off your education loan in the best way. If you turn them into habits, you will take the best financial lessons with you to your college campus! Are you ready?
1. Gather all the free financial aids before getting a student loan.
The most important point to be kept in mind is to get the most free aid possible before borrowing money for your student loan. For instance, there is an option of a fee-waiver seat in most of the colleges, where you have to show your parents’ income certificate and you are granted a discount on your tuition fees.
This seat is saved for meritorious students, providing them a chance to complete their college in lesser bucks. If you think you are worthy enough, just get going!
Moreover, during your vacations, spend all your extra time doing part-time jobs and internships. Strictly remind yourself to not touch this money and save it up for your college.
Don’t let the little pay demotivate you. Be consistent.
Also, last but not the least, keep a check on all the scholarship schemes that can help ward off student loan debt. Keep applying in all those which qualify your eligibility criteria. There are hundreds of scholarship schemes by the government and private organizations. All you need to do is do thorough research and keep applying!
2. Choosing best student loan for a college education.
Sometimes, you need a student loan from a bank to fund your college education. If you feel relaxed after just signing a few pieces of paper, feeling that your job is over and you have to look into the matter only after the college is over – that’s where you are wrong.
First, do your research very well about the banks. There are some government banks that offer lesser interest on education loans than the private student loans. Moreover, there are banks that give you a little more time after college to start repaying your student loan. Consider all the options and then make the perfect decision.
Once you take the student loan, do not just push it to the back of your mind. Each year, write down the amount you borrow; doing this can make the debt feel more real, personal finance experts say. Having that information accessible will help organize repayment planning and your post grad budget, says Vince Shorb, CEO of the National Financial Educators Council.
Shorb suggests creating a file that includes student loan lender information, loan amounts, interest rates, dates when payments will begin and payment amounts. To estimate what you’ll pay each month, you could use one of the many student loan calculators available online.
3. Make a college spending plan and STICK to it.
You should think of a college spending plan as a short-term strategy for your money. It’s more flexible than a traditional budget and factors in money available only after tuition, fees, room and board are funded.
Your spending plan could look like this: Say you have Rs. 10,000 for a 6 month semester and you know you’ll be making one trip home at Diwali that would cost Rs. 1,500. That leaves Rs. 8,500 or Rs. 1,416 per month for extras. Spend cautiously and save as much as you can!
A spending plan shows how overspending one month (which might be your best friend’s birthday or a farewell party) will leave you with a cash shortage the next month. Even a shortfall of Rs. 500 could feel stressful, so plan accordingly.
Whenever you feel a little low, remember that you’re doing this plan to create ways to reduce the stress of the student loan that you have on yourself. So you’re not behind and trying to catch up.
4. Why not pay out your education loan NOW?
Student loan payments typically begin when your grace period ends, which could be immediately or six months after leaving school.
But for all student loans (barring a few government loans), interest builds daily and is added to the total amount you owe when payment begins. Due to this, you end up paying a lot more than you actually borrowed.
But wait, here’s a solution.
If your spending plan allows, you can lessen your total debt by making monthly interest pre-payments for your student loan while you’re still in college. Or send a lump sum interest payment before the grace period ends.
5. You should start building credit for the future.
Creditworthiness is key to getting approved when you rent an apartment or apply to get a credit card, auto loan or home loan. The sooner you start building credit, the longer your history will be.
You might have been told by people that there’s a risk with credit cards if you don’t repay the debt, but you shouldn’t be afraid to get one. If you don’t have a credit card, you don’t learn how to use it with lower financial stakes. As long as you pay your bills on time, using a card will help your credit.
To get a credit card, you need to be 21 or have a co-signer or an income. Another option is to become an authorized user on someone else’s card, like a parent. But before you get any card, read the fine print, including specifics about its annual percentage rate. If you feel you’re okay with them get one.
However, there is no need to rush things. You can wait until you are at a stable place, and then get it, or if you’re not comfortable and feel chained by the terms, don’t get it!
But if you do, do not forget to find the interest rate that will be applied to any outstanding balance after the no-interest introductory period.
6. Steer clear of financial predators.
As you are still young, you better be aware of the financial predators. They come in all shapes, so avoiding them often comes down to trusting your gut. Remember, If a transaction seems shady, don’t do it.
Some red flags are easy to spot, such as too-good-to-be-true deals or pressure to send money fast, or transfer your student loan to interest free student loan. Other scammers are harder to avoid, such as credit card thieves. Defend your money by automating fraud alerts from your bank and credit card company. These let you know about any unusual purchases.
Do not share your personal information(card details, ATM pins) with anyone. Prevention is better than cure, right?
College brings with itself lots of experiences. If you keep a hold on your finances and manage money well enough, this phase would give you the best memories of your life. Do not get influenced by your peers – they are a different person with different financial situations. Focus well on your career and make the most of what you get. All the best!
Psst. A secret tip is to start saving for your goals early, which you can do with the Sqrrl App. You can invest for your goals, which in this case is education, and earn high returns from direct zero commission mutual funds!