Wow, it’s 2021 and it seems like another year has just flown by. If you’re a high school senior, I’m sure the last few months have been full of activities as you apply to college and look for financial aid to help cover the costs. If you are a high school junior, this year will be a hectic one for you as well as you head down the same road to college. Those students already in college, or those who graduated in 2020, are all engaged in exciting new activities that will lay the foundation for their “adult” life.
In addition to being the start of another year with a fresh plate of opportunities, January also represents the time when we like to think about how we can do things better in the year to come. For students I would recommend taking a look at the way you borrow and use the money that is available to you through student loans. Here are my suggestions regarding financial resolutions to make with student loans:
• Learn more about student loans: Perhaps you have heard about the surprising number of students who have large amounts of student loans to repay after graduation. They struggle to make payments. After finding they don’t earn enough money to make their loan payments and live on their own, many are forced to move back in with their parents for financial reasons. Those who decide to get married after college may face a double whammy if their spouse also has a substantial amount of debt. Resolve to learn about all the ways to finance college including student loans so you don’t do the same.
• Really, really watch your spending: With the ability to borrow money through federal student loans, some students might think of it as “free” money. They max out the amount of money they borrow each year and spend it on a variety of things that probably do not advance their education. When repayment time comes after graduation they are truly surprised at how much money they now owe. Resolve to earn as much as possible, maximize scholarships, borrow as little as possible, and spend money frugally.
• Carefully study repayment options: There are many income-based and extended time period options for repaying student loans. At first blush they might seem like a good idea as it makes the initial monthly payment smaller. But you might end up making payments for a much longer period of time that could cost you a lot more money than if you had just bitten the bullet and stayed with the original plan. Another option many students choose is to refinance their student loans under one umbrella loan so they only have to make one payment per month. While this is a good idea to reduce the amount of paperwork you have to deal with, it might result in the loss of some benefits. Resolve to learn more about repayment options before college graduation so you will be able to make choices that are best for your income level and personal life plans.
If you are attending a more expensive college, or federal student aid does not cover the total cost of your education, you might have to look into borrowing money through private student loans in addition to the federal student loans that are available. Each private student loan lender is different, so it requires a lot more research.
Many people make resolutions about weight or money on January 1, and then laugh about how quickly they move away from their best intentions. For high school and college students who need to borrow money to pay for their education, set 2021 as the year you make smart student loan resolutions and then make sure you keep them! Happy New Year !!