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What you should consider when you take out a student loan

What you should consider when you take out a student loan

If you have no other choice than to take out a student loan, it is best that you are aware of the positives and negatives outcomes; for the reasons that you be a smart borrower and know what to expect.

The thought of paying back the money you loaned can be a terrifying thought; therefore, it is only wise to equip yourself with the necessary information to pay off your student loan.

What to consider before taking out a student loan

  • Loans cost money; therefore, you should not take out more than you need.

  • Only take out a student loan once you have exhausted all your options.

  • Be prepared to take a job straight after college/university as debt increases the longer you take to pay.

  • Have in mind that paying off a loan is not easy will take you at least 4 years to pay off.

  • Expect that most of your salary will go towards the loan if you want to pay it off as soon as possible.

The truth about student loans

South Africans are known to be severely indebted due to the high cost of education, lack of financial education and therefore have poor management of finances. Anyone can easily fall into this bracket therefore it is important that you see taking out a student loan as serious and be prepared to sacrifice a lot to achieve paying it off. Read further for tips and advice when taking out a student loan.

Tips and advice for when and if you have taken out a student loan

Credit score

Your credit score is an indication of your financial wellbeing and it is one of the most valuable ways to empower yourself financially; however, when you stop paying your student loan it can have a long-lasting effect on your credit score. Remember a bad credit score will generate a bad reputation when you want to loan money in the future and can become a problem when you would like to get accommodation or take out contracts.

Your debt will not vanish

Do not ignore your debt. Especially for people who have already taken out a student loan, do not stop repaying completely, instead create a repayment plan to avoid a negative credt score and an increase in the amount you owe.

When you graduate

Once you have graduate, immediately draw up a budget and a repayment plan. Try to have your payment plan repay your loan within four years. Get a job as soon as you graduate so that you will be able to stick to your payment plan.

Budget

Stick to a strict budget and try to live well below your means, life with a student loan can get tough when you repaying yourself, therefore be financially smart and you will not end up with a greater debt and a negative credit record.

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