Reflections On Student Debt

Writen by Gary Harvey

Graduates typically earn more over their lifetime than those who did not pursue higher education. But how to pay for that university degree or specialized education?

By the time some students complete their university studies these days, they graduate with a student debt that is counted in six figures. Ouch!

So naturally, students will look for free money if they can find it. If you are a student, what are your options?

PAYING FOR HIGHER EDUCATION: OPTIONS

Scholarships: A minority of students can successfully compete for financial scholarships. If that's not you, read on...

Grants and gifts: Depending on the career you are preparing for, non-repayable grants may be available from your industry. Also, governments often have some funds earmarked for student grants. In the USA, the Pell Grant is an example.

Part-time employment during your education years: While it may not cover all your costs, having a job during school will certainly help. And while you are working, you will have less time to be tempted to spend money. Social expenses can eat a big hole in the student budget.

Student loans: Low interest student loans are another popular alternative. The resulting student debt must be serviced in the early years after you graduate. In the USA, Stafford Loans (Guaranteed Student Loans) are available with low interest rates. In the case of subsidized loans to needy students, the government pays the interest while you're in college.

Direct Student Loans: These are low-interest loans made by the education institution itself, using funding sources available to the school.

Government cost-of-living funding: Depending on the educational assistance policies of the country you live in and your own economic circumstances, you may qualify for government money. In Australia, the Austudy program helps tens of thousands of students complete their tertiary studies. Repayment starts after graduation but only when the graduate's income passes an inflation-adjusted threshold. In the UK, the repayment of student loans starts when the graduate's income exceeds £10,000 per year.

STUDENT DEBT: REPAYMENT REALITIES

You must start to service your student debt shortly after you enter the workforce which is typically the lowest paid years of your careers. It is also the time when you will also be handling other expenses such as establishing a family.

If you cannot service your student loan after completing your education, it is important not to default on your payments as that triggers a set of punitive responses from the relevant government departments. In the USA, your tax refund is sent to the Education Department and your wages are garnished.

Also, your credit rating is damaged and that penalty travels with you for some years.

Plus, they add substantial collection fees to your already-high student debt.

In a word, don't. Don't default, that is. Instead, talk to an Ombudsman at the Department of Education or to an appropriate authority in your country.

A good time to think carefully about the practicalities of actually repaying your student loan is when you are applying for it in the first place.

student.debt-go.com is a significant source of further information about a range of debt issues, including student debt. Check it out today.