College semesters are starting around the country this week and students are flooding into classrooms. While most students have a list of worries ahead of them, one thing isn’t on their minds: student loan debt payments. Since debts do not need to be repaid until after graduation, most students put it out of their minds until later. However, now that current bankruptcy laws do not allow for such debts to be discharged, students should consider a new strategy before graduation.
Time To Focus
It is estimated that the average college student will owe $25,000 or more by the time they finish a 4-year degree. Graduate or medical school costs can range all the way up to $100,000 in loan debt. Although lenders grant a break on debt repayment until after courses are complete, waiting this long to plan for payments may not be the best idea.
A smart borrower plans for their repayment well in advance and even has a plan for emergency situations. It is a good idea to begin saving money that is allocated only for the purposes of payments towards student loans. Identify how much money can be set aside every month and earmark this money in a separate account. Saving just $100 a month can save $4800 over the course of a 4-year degree. While this may not seem like much in comparison to the $25,000 owed, it can certainly provide enough money to cover monthly payments in the event of a financial hardship that makes loan repayment difficult.