Preventing Student Debt Disaster

: Chris Lee Law Firm

  Filed under: Student Loans

The fall semester of college is now in full swing. Already students are racking up loads of student loan debt and growing their credit card debt balance with each passing day. The average college student will graduate with $25,000 or more in student loans and over $5,000 in credit card debt; all before they step foot into their career field. With this growing problem, comes even more responsibility in preventing debt before it happens.

Taking A Step Back

Since a change in bankruptcy laws in 2005 has made it nearly impossible to discharge student loan debt, it is more important than ever that people rely on themselves to keep out of debt while in college. For many students, the new found freedom of college leads to poor money management and over-borrowing. Many students take out loans for far more than they need to cover the cost of tuition and books, using this money to supplement their daily living expenses. This is a very bad habit. Instead of using borrowed money to fund the costs of living, students should be working to obtain a paycheck. This may mean that fewer classes are taken each semester, or that having a job after school hours is required. The price of sacrifice along the way is worth far more to a financially healthy future than quick cash.

Many college students also fall easily into credit card traps, as they become a prime target for many credit companies. Because they are new to the credit game, most offers carry high interest rates and fees; costing more in the long run. Students should view credit as a tool for building a name for themselves as a responsible borrower, not for convenient money. Similarly, there are many good offers out there, but it takes time to shop around for a good credit offer. Compromising a lower spending limit for a better interest rate is a more practical way to use credit, especially for beginners.

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