The announcement that President Barack Obama only finished paying off his student loan eight years ago demonstrates the huge commitment that taking on debt to pay for one’s studies can have for millions of students around the world.
According to reports in the US, student debt will this year amount to $1.2 trillion. In South Africa, the figures are lower but still present similar challenges. For example, student debt at the University of KwaZulu-Natal is reported to total about R220 million, while R166 million is owed by students to Unisa, indicating that similar financial challenges are faced locally in paying back student debt.
Wikus Olivier, Debt counsellor at DebtSafe shares 4 tips on how to manage your student loan
Work out how much is enough
Borrow only what you need when taking out your loan. This includes determining how much money you need to cover your student costs, academic material, your cost of living and your family’s contribution. You do not have to accept the entire amount of the loan that you are offered. “If you manage to get a student loan be sure to use it for what it was intended. Do not use it to pay for all sorts of other stuff, or splurge it on unnecessary things,” says Olivier.
Draw up a budget
Draw up a budget as soon as you have graduated that includes the monthly repayments you need to make. Budgeting will ensure that you not only know where your money goes each month, adding structure, but also that you remain within your financial means. Budgeting will enable you to factor in regular payments as soon as you start earning a salary, preventing your debt from growing to uncontrollable amounts.
Shop around
Don’t just take the first option to come your way. Shop around for cheaper rates and be prepared to negotiate.
Consider working while you are studying
This will ensure that you do not have to borrow as much as you originally intended. Tutoring, bartending or being a waitron are all ways of making extra cash to ensure that your basic needs are covered.
“For some, taking out a student loan may be the only way to afford a tertiary education. However, this does not need to be a constant source of worry and stress if all the recommended steps are taken into consideration and implemented correctly,” concludes Olivier.
