After graduation, repayment of student loans must be high on your list of priorities.
Ayanna Kirton, Staff Reporter
THE BEGINNING of the academic year often means big spending for college or university students. Tuition, books, food, and transportation are just a few of the expenses that can burn a hole through any student's pocket in a very short time.
Student loans and the mere thought of paying them back are also a constant source of distress for many. The burden of servicing this debt is often undertaken immediately after graduation leaving many students frustrated with little or no money to get by let alone enjoy the fruits of their labour. As the largest local source of funding for education, the Student Loan Bureau offers unsecured loans at a variable interest rate of 16 per cent. This interest is accrued throughout the life of the loan and each student has a maximum of 10 years to repay the student loan.
The course of study is included in the ten-year period. For example, a student doing a three-year course will have seven years remaining to repay the loan. According to the Bureau, students have the option to start repayment before the course ends and they can choose to repay the loan in as short a time as possible i.e., the entire 10 years do not have to be utilised. The reality remains however that the majority of students who obtain student loans are unable to pay them back before they graduate.
WITHIN A YEAR
A graduate of the University of the West Indies said he managed to pay his student loan within a year of graduation. "Because I lived with my parents I was able to pay off my loan so quickly," he admitted. "It's difficult for people who live on their own or have families to support, but it is inevitable." He offered the following tips for students contemplating applying for a student loan as well as those faced with the task of repayment.
Use the student loan as a last resort. Do not apply for a loan unless you have exhausted all other possibilities.
After graduation, make repayment high on your list of priorities
Think of paying off your student loan as a reward to a fresh start or new beginning
Make all student loan payments before committing yourself to servicing any other debts, such as car payments.
After you have completed all your payments to the Student's Loan Bureau, ensure that you get a letter or some form of documentation indicating that you have paid off the full amount to avoid unnecessary problems.
The Student Loan Bureau suggests applying the same techniques to paying off a student loan that you would any other lending arrangement. The Bureau advises students to repay their loans as quickly as possible. Payments should be made promptly to avoid late payment fees and close attention should be paid to the status of your loan payments to ensure that all payments are received and recorded. It is important to note that even if the required total cannot be paid every month, the minimum monthly payment is mandatory.
Lucy Lazarony, finance specialist and writer for Bankrate.com offers the following money management tips for students:
TRACK IT
Track your spending for two to four weeks to find out where your money is going. Are seven trips a week to a fast food restaurant really necessary? Often students don't realise how much they spend on little things. Usually, just by tracking expenses, you'll start to curb expenses.
GET A PLAN
The best way to manage your money over the course of a semester is to sit down and map out a budget. List sources of income such as scholarships, loans, money from summer jobs and cash from your parents. Then list expenses, such as tuition, books and groceries.
The Bank of Nova Scotia at the UWI's Mona campus recommends including the following expenses when planning a student budget:
Tuition
Rent/Hall Fees
Groceries
Meals
Transportation costs
Utilities (telephone/cable/electricity/water)
Medical expenses
Toiletries
Personal care (hairdresser, barber, etc.)
Entertainment
Academic department needs (project material, re-marks, etc.)
Books/stationery
Photocopies
Miscellaneous
University life is full of opportunities to spend. Developing a budget will help to maintain control of your money and limit spending. Realistically, identifying your living expenses in advance can be tricky. Remember that budgets need to be flexible and can be revised after the first month or two. The next step is to total income and expenses. If expenses outpace income, you may need to find ways to increase the income stream, perhaps by taking on a part-time job, or by reducing spending.
ENTERTAINMENT OR GOOD-TIME MONEY
If you know you need to buy a new CD or go to a concert or a party every week, make room for that in your budget. Though many bookworms may consider entertainment a frivolous expense some students need it to function optimally. Spending can be kept to a minimum by looking for low-cost entertainment on campus. Also, joining clubs and organisations ensures that a college student will have something to do and someone to do it with, and the expenses are far less than what could be incurred on a weekend shopping spree. Students also need to learn to comparison shop and economise. Purchasing used textbooks, sharing taxis, buying generic brands and renting videos instead of going to the movies are just some of the ways a savvy scholar can save money.
PACE YOURSELF
If you spend, spend, spend at the beginning of the semester, you could be tapped out later. Give yourself a spending limit for each week. Stick to it and you won't have to eat Ramen and crackers every day in December. "Eat out only once or twice a week so you won't end up spending all your money in the first few weeks," says Kristin DiSpirito, regional co-ordinator of education for Consumer Credit Counselling Service of Southern New England. "Tell yourself: I can't go out four nights a week. I can only go out one."
GO EASY WITH THE CREDIT CARDS
"One quick way to spend beyond your means is to charge it," says Mallary Tytel, president of Education and Training Programmes Inc. Use credit cards sparingly. Once you get into the habit of reaching for a credit card, it can be hard to stop. Also refrain from charging small items like snacks on your credit card. Reserve credit card use for larger purchases.
SET YOUR OWN CREDIT LINE
"Just because you have a credit card with a US$20,000 credit line doesn't mean you have to spend US$20,000," DiSpirito says. "If you know you can only pay back US$5,000, then just spend that."
GET REAL
You can do what you want, but you can't do everything you want. You're going to have to make some choices. Whatever you choose is going to cost some money. Be realistic. "You need to understand you can't have everything and you have to understand there's consequences," Tytel says. "At some point there needs to be a reality check in terms of what things cost."
STUFF HAPPENS
If you break your budget on something you really want to do this week, make up for it next week. "Even with the best planning possible, something is going to happen," DiSpirito says. "There is going to be a really great party that you may want to go to." if you decide to go, be prepared to buckle down on future spending to make up for it.
GET IN TOUCH WITH YOUR ROOMMATE
Contact your roommate before the semester begins to split expenses. Decide who will bring what in terms of appliances such as a television or a microwave. Discussing this beforehand may cut out a few expenses. Why spend money on two appliances when you can both share one?
SPREAD IT OUT
"Most of the big expenses are at the beginning of the school year," Tytel says. "Buy books as you need them. That will spread out expenses."
Buying books on-line is another option and you may even get a better deal than the bookstore at your school. Buy used books whenever possible.
ASK FOR HELP WHEN YOU NEED IT
Some students are fortunate to have parents they can depend on. Although it can be very difficult to call them for money, muster up the courage to phone home. The longer you put it off, the worse things get.
