As University, Polytechnics and college costs rise, many students find themselves taking out bigger and bigger loans to pay the bills. If you have considered the cost of running just a semester, then you will have a deeper understand why you need not to be on the side of borrowing alot.
Here are five strategies to help avoid sinking your financial future while paying for college:
- Borrow no more than you need. Students loans should be used to pay for educational expenses only: tuition, books, required fees and, if necessary, room and board. Consider getting a part-time job if you need money for travel, a car or simply to enjoy the “college experience.” The problem of most students is they borrow cash for irrelevant purposes such as; getting that sneakers, shirt, top, blouse etc. These stuff should not be your reasons for a student loan.
- Keep your career earnings in mind. Limit the amount you borrow based on your intended career after college. It makes no sense, for example, to graduate from school with N200,000 in debt if you’re going to be working a job that pays N500,000 a year. Your monthly loan payments will severely hamper post-college life, making it more difficult to buy a car or a home or start a family. To help determine how much you can safely borrow, keep this rule of thumb in mind: The total of all your monthly debt payments (including education loans plus car, home, etc.) should be less than 36% of your monthly pretax income.
- Understand your loan terms. Know the interest rate, the monthly amount due and the date when you have to start repayment. Also, stay in touch with your lender and let him/her know if your educational status changes, such as if you graduate early, drop out or transfer to a different school.
- Make payments on time. Ignoring your student debt can torpedo your credit rating, making it more difficult (and expensive) to take out a mortgage, get a car loan or borrow for anything else. Some companies will even check a potential employee’s credit history when hiring and sometimes, people tend to see you in a bad light if you fail to fulfil your own part of the deal on time.
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