Student Loan Summary Christine Downey FP/101 August 15, 2010 Griselle Forte What are some future consequences of borrowing too much debt? Some of the most telling future consequences of borrowing too much debt would be evictions, foreclosures, declaring personal bankruptcies, wage garnishments, divorces, emotional break downs, higher than normal interest rates on loans, rejection of application for loans, ruined credibility, savings and retirement plans wiped out, and an undesirable credit report and score. Debt affects people in different ways and has a major impact on the life of each individual.
It often determines how they will be able to live their lives. There are only two ways to acquire things that you cannot afford to pay out of pocket. Save until you have accumulated enough money to buy, or borrow the money with the promise you will pay the money back with interest over time. When borrowing, the best thing for anyone to do is always borrow money they are sure they can repay, be prompt in their payments, and pay more than the minimum amount to avoid future financial consequences in your life than you have already.
How do you plan on repaying your student loans? Regarding the Stafford Loan that is offered to University of Phoenix students, you have six months following college graduation before repayment of your student loan begins. After this time, you are responsible for the regular monthly payments, which were originally agreed upon between the student and the lender. This grace period should be used wisely. The goal of a student at this point, is to secure a job that allows him or her to reasonably manage all of their monthly bills, including their student loan.
If a problem should arise where you cannot make ends meet during your grace period, immediately contact your financial advisor to aid you in modifying your repayment terms. I have opened a separate savings account strictly for college that I contribute to each week. It is better to set some money aside to cover repayment of my student loan than to feel the full financial burden when it is due. So much of the loan process is planning. All you do is plan when it comes to finances. You have to plan out your expenses to make sure you can afford your tuition bill.
When you cannot afford tuition in its entirety, you get a student loan to cover the cost. If you are smart, while you are in college you can plan how to repay your loan. Once you graduate, you can work on getting a job that allows you to afford all of your expenses and make repaying your student loan less painful. What is one positive thing you can do to keep your student loans under control? One positive thing you can do to keep your student loans under control is to learn the best way to manage your hard-earned money while you are in college: Financial discipline.
Do not borrow more than you need. Frugality can help you reduce the amount of the loan you applied for, as well as the amount you are going to be responsible for repaying. Plan a financial budget and live by it. Keeping your finances under control (with the help of being currently employed) should enable you to set money aside for repayment of your student loans when they come due. Once that kicks in, you have an opportunity to make further productive use of your student loan, beyond getting your degree; Making it a positive force in your credit history.
Using your loan to create a positive credit history is as simple as making your payments on time and in doing so, your responsible behavior is reported to the credit report agencies, keeping your credit score at a good level rather than making it a lower score. Your student loan debt presents you with an opportunity. With proper knowledge and confidence, you can make the most of this opportunity, and establish yourself firmly in the realm of the responsible, moving steadily towards your lifestyle goals. Student Loan Summary
