The Finance Blogger

Grads Average $35,200 in Debt When they Graduate

student loansGoing to post-secondary school is expensive and many grads are finding out just how expensive it is when they graduate and begin adding up all of their debt from student loans, family members, personal loans, and even credit card debt. The average student debt in 2013 apparently is more than $35,000. When they graduate many of them have little prospect of repaying their loans anytime soon.

The economy is improving and many more people are working. However, the pay rates for many grads is at the minimum wage level. Or just above that since few companies are hiring and willing to pay larger salaries. As a result, these grads are having a difficult time repaying loans. Let alone deal with buying cars and paying rent for a place to live. Buying a home is totally out of the question for these people due to their student debt.

If they have credit card debt these same grads are faced with daunting interest rates. If you thought that the loan rates of 6% were high for student loans, try 19%. Some rates are even higher for credit card balances that are not paid at the end of the month. It can be very difficult to repay these kinds of debts.  Interest is piling on at the rate of 19% let alone the student loan rate of 6%.

New Grads Have to Deal With Student Debt

New grads have no choice. They must deal with the student debt they have and focus on meeting the monthly payments as a minimum. Failure to meet all monthly payment commitments can lead to bad credit ratings. Which will affect them later in life when they apply for a personal loan or a mortgage. They could be faced with an outright refusal by lenders to loan them any money at all. Or if they do the interest rates could be very high making it too expensive to borrow money.

Family debt can be paid last since most parents and family are not going to report nonpayment to the credit bureau. But make sure that the family knows that you plan to repay them. Otherwise, the student can jeopardize family relationships. This can cause severe disruptions in family relations.

Focus on meeting all monthly payments first, then take any extra money you may have and pay extra payments on the highest interest-bearing debt that you have. This may be credit cards or another personal loan that has a high-interest rate. Once this high-interest debt is repaid, use the monthly payment that is now available to repay your other debts even more quickly.

Grads Planning for School – Student Debt

If you are just beginning your education, this is the time to plan your financing situation. Get a part-time job, minimize your expenses, live at home, and do whatever you can to minimize your expenses while attending post-secondary schools. You may still have some debt when you graduate, but you will owe a lot less as a result and will have an easier time repaying all of your student debt.

Focus on getting a job when you graduate and if possible turn your part-time job into a full-time job when you graduate even if this means that you are not working in your field. It is far easier to find a job when you are working than it is when you are not employed. With a job, you will also be able to bridge the time from when you graduate until you find a job related to your education. With a job, you can begin paying your student loans off and reducing your debts while looking for a permanent job.

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