How to Manage Student Debt

Welcome to our last post for the month of October! Unfortunately, your students will continue being haunted by student loans long after deciding what loans are most convenient for them.

Developing a plan to manage their student loans is crucial to long-term financial and overall health. Here are a few tips to help your students manage their loans.

To learn how to budget click here.

For more information on consolidating your loans click here.

Join us at World Future Forum for more research findings and best practices on student debt!

Types of Loans

After heavily researching and applying to scholarships and grants to pay for college, students might need to look for student loans. As discussed in our previous blog, Components of Loans, there are three basic components students should look out for when considering loans. Student loans come in various shapes and sizes and there is no universal “better” option. It is all very dependent on the individual student. This can, definitely, be overwhelming for your students; however, here is a quick cheat sheet we have created for you!

Join us at World Future Forum for more research findings and best practices on student debt!

Components of Loans

Early this month, we briefly mentioned loans, but what is a loan and what must a student look out for when considering one to pay for their higher education? To that I say, “Do not fear; we will show you the ins and outs of loans here!”

A loan is when a party borrows money from another with the agreement that the amount (plus a percentage) will be repaid to the lender. There are three basic components of loans: interest rate, term of the loan and security.

The interest rate is basically the extra amount the lender is charging the student to borrow their money. This is usually a percentage of the total amount loaned and can range greatly. The lower the interest rate, the better. It is very important that the student understands the exact amount of money that the interest is adding on to the loan, because it adds up quickly. There are two types of interest rates: fixed and variable. Fixed rates will not change throughout the life of the loan; on the other hand, variable rates will change depending on market conditions.

The term of a loan dictates the maximum amount of time the student has to pay the loan plus interest back in full. The term of a loan can be anywhere from 1 to 30 years. It is important to note that loans can be completely paid off before the term with no repercussions. The term of the loan will affect the student’s monthly payment, so it is something that will depend on the individual student.

Loan security is either secured or unsecured. A secured loan requires a collateral. This means that if the student does not pay the loan, the lender can keep that collateral. This guarantees that the lender will somehow get their money back. Contrarily, an unsecured loan requires no collateral so the lender cannot make their money back if the student does not pay back. However, unsecured loans usually have a higher interest rate because of the risk taken by the lender.

There is no universal correct way to decide on a loan. It depends solely on the individual student and their financial situation.

Look out for our next blog post to learn about the different types of student loans available.

Join us at World Future Forum for more research findings and best practices on student debt!

Student Debt

During the month of October, we will focus on the scariest of topics: student debt. Student debt is at an all time high recently. Did you know that student debt has increased a shocking 145 percent since 2008? And that the average debt for a student who graduated with a bachelors degree in 2015 is around $30,000?

Dealing with a large debt while trying to find a job and, perhaps, looking for a place to live or moving back home can be very stressful. According to Student Loan Hero, over 70 percent of students reported suffering from headaches related to student debt stress. Other outcomes of student debt include: insomnia, physical pain and isolation due to depression and anxiety. This can be very dangerous as it can potentially cause disease and even death.

But do not worry! That is what World Future Forum is here for. There are many ways to avoid the toll student debt can cause in our students and, as educators, we can help. Stay tuned to find out ways to help your students confront student debt and learn how to manage it more effectively.

Join us at World Future Forum for more research findings and best practices on student debt!