Managing Your Debt
1. Create a budget
A budget is the most important tool you can have while you are in school. It is a framework for "living within your means." In order to create a realistic budget, you must first assess your current lifestyle and spending habits. You must also recognize that, more than likely, these patterns will drastically change when you become a full-time student.
Start by itemizing your basic monthly living expenses, such as rent, utilities, food, clothing, laundry, transportation, entertainment, etc. A monthly budget is preferable to semester or yearly budget because it allows you to assess both your short-term and long-term expenses. The next step is to itemize your financial resources, including parental/family support, savings, part-time work income and so on. After this, you can compare your projected monthly expenses with your projected monthly income to determine the amount (if any) of student loans you may need. Only borrow what you need! Unsubsidized student loans begin to accrue interest at the time of disbursement, so you can expect to repay more than the amount you borrow. Use an online calculator to help you determine your monthly loan payments. Note that online tools are only recommended as resources, and should not be used to yield true repayment figures.
2. Monitor your debts
It is critical to consistently monitor your loan indebtedness while in school so you have a realistic understanding of your financial obligations once you are out of school. Check your loan history online, or go to the National Student Loan Database System to find record of all your federal loans.
3. Avoid using credit cards
Credit cards are tempting, particularly for students on limited budgets. However, use them responsibly. A negative credit history will jeopardize your ability to secure a mortgage, a car loan or other lines of credit in the future.
Consider these tips: Reserve credit card use for emergencies only, limit yourself to one card, avoid "impulse" purchases and pay your balance each month to avoid interest charges.
4. Maintain a financial file
It is highly recommended that you create and maintain a file of all financial paperwork. This file should include copies of all applications, promissory notes, lender correspondence, disclosure statements and any other important documents.
The debt management information on this page is provided solely as a guideline and is not intended to serve as professional financial advising.