Avoiding Student Loan Debt this Back to School Season
It’s back to school time, which is often a busy time for just about everyone. Summer is over and that means it’s back to routines and schedules. However this time of year isn’t just busy, it can also be expensive. If you’re not careful, back to school season can lead to serious debt problems. However, with some budgeting, you can survive back to school season without ending up in financial trouble.
Here are a few tips for back to school budgeting:
Have a Plan
Like with all budgets, you need to make sure that you have a plan. Know how much you can afford to spend and which school supplies are needed. Having a plan and sticking to it will keep you from overspending and wasting money on impulse buy items that you or your children don’t really need.
The Internet makes comparison shopping easier than ever before. Shopping around for the best prices will help you stay within your budget and save you some money.
Remember, not everything needs to be new! Part of budgeting for back to school involves knowing what you actually need to buy new. Check what you already have at home, see what can be reused from last year and shop at garage sales and secondhand stores whenever possible.
Keep your Budget
Budgeting is easier when you know what to expect. Therefore, once you’ve put your back to school budget together for this year, save it. Even after you’ve completed all of your shopping, it can still be very useful. How? It can be used as a basis for next year’s budget. When you have a general idea of how much back to school shopping costs, it makes it easier to budget.
When you’re doing your back to school shopping, it’s important that you remember your budget. Spending without a plan, especially spending on a credit card, can lead to serious debt troubles if you’re not careful.
About Student Loans
Student loans are another type of expense that comes up around this time. If you’re a current student, you won’t have to pay back your loans until you graduate, but that doesn’t mean you shouldn’t be thinking about them. The average student loan debt for a graduating student usually ends up somewhere between $20,000 and $30,000. That is a lot of money. If you don’t have a plan to pay it back, you could find yourself in trouble when you graduate.
In today’s world, many recent graduates have difficulty getting well-paying jobs in their field when they are finished school, which makes paying back loans incredibly difficult. This problem gets even bigger when you remember that student loans start accumulating interest as soon as you finish school (though some provinces do not charge interest on provincial portions.)
If you do not have a plan to repay your student loans, you could find yourself struggling financially when they come due. Remember that, in addition to student loan payments, you’ll also have a lot of other expenses to budget for during the first few years out of school. These expenses could include a new home, a car, clothing, vacations and possibly even costs associated with marriage and children. All of these expenses add up and make it difficult to afford student loan payments.
However, graduates who are finding it tough to repay their student loans do have options. One option is the government’s repayment assistance plan. This is a plan that you need to apply for as enrolment is not automatic. Under this plan, you could have your student loan payments reduced or eliminated, depending on your financial situation. You will need to reapply every six months.
When it comes to bankruptcy or consumer proposal, it’s important to remember that you cannot include student loans in these processes unless you have been out of school for at least seven years. Therefore, budgeting becomes even more important. Without a plan for how you’re going to handle your expenses and pay down your student loans, you could find yourself in financial difficulty. If you do, speaking with a licensed insolvency trustee could help. Even though you may not be able to include your student loans, the bankruptcy and consumer proposal processes may still help you if you have other debts.