Question

1. Other than advising others to “be careful,” what suggestion(s) would you give to a college student thinking of using credit? List at least one suggestion and your reason for making that suggestion.
2. The opportunities to take on debt are almost limitless. Given that it is possible to purchase almost everything on credit, what factors should people consider when deciding how much debt they can handle?
3. In recent years there have been a number of data hacks or breeches that have exposed personal credit information. How do these events affect your views on having credit, using credit, monitoring credit?

Answer 1

1)One of the best things you can do to limit your loans is to fill out the FAFSA before every academic year. This is your chance to get grants from the government and qualify for federal aid, including federal loans — which will most likely have a lower interest rate than private loans and come with a variety of other benefits, including the possibility of loan forgiveness and more manageable payment plans.

2)Scholarships are free money that you can get from organizations or your school. Regardless of what year you are in school, you should be searching for scholarships. Every scholarship means you’ll pay less in tuition and take on less debt in student loans. You can search for scholarships at your college (visit the financial aid department), within any professional fields you’re interested in, through organizations in your community, and any other groups or affiliations you’re involved with.

3)Grants are similar to scholarships in that they are free money — you do not have to pay them back. Check your state government and other organizations for grants.

4)When you’re taking out loans, opt for federal first. The interest rate is generally going to be lower than you’ll get from private loans, so you’ll pay less over the long run once you get out of school.

5)Between taking classes, studying, getting involved on campus, and squeezing in a social life, holding down even a part-time job may not be your top priority. But working can really help alleviate your debt load. Any amount you earn is money you won’t need to borrow, and the less you’ll have to deal with upon graduation.

6)Just because it’s offered to you, as tempting as it may be, avoid taking out the maximum amount on your loans. Calculate the cost of tuition and living expenses. You’ll need enough to cover that amount. Before you turn to student loans to cover that amount, factor in what you’ve saved and the income you’re earning now. Only use loans for what is necessary. Don’t take out extra for clothes or vacations. Those things will come in time when you are earning enough to afford them. Not only will you appreciate it that much more, but it won’t cost you double the price tag since if you’re buying stuff with loans, you’re getting charged interest.

7)A great way to limit your student loans is to create a monthly budget and stick to it. After you’ve paid your tuition and fees for the semester, you’ll want to calculate what your monthly expenses are. Total up what you pay for your rent, utilities, food, entertainment, cell phone, transportation costs, and anything else you spend money on.

8)One perk of college is that you’ll get chunks of time off. Depending on the type of school you’re attending, you may get a holiday break between fall and spring semester, a week or so off for spring break, and summer vacation. Often, college breaks are associated with wild trips to Cancun, partying, and relaxing. If you can afford it, bon voyage! But if you’re like most students, and student loans are going to be heavy burden, use your breaks a little more wisely. Instead, get a part-time job to save money for the next semester. During summer break, apply for internships for extra money and, critically, work experience. If an internship helps you secure a good-paying job soon after graduation, that may do more to to help with your loans than any other step you take.

9)Don’t just blindly take out loans every semester and then forget about them. Too many times college students, with just a few simple clicks, take on thousands of loans each semester. Instead, take time to understand your loans. What is the interest rate? How much will you owe after college? Meet with a financial aid counselor to have them help you figure out your loans. Keeping track of that debt piling up can also be the incentive you need to take on a part-time job or limit your spending.

10)Check your credit and monitor on a regular basis inorder to ensure if your accounts have been affected. Set a strong password for every account and never share it with anyone. If something wrong happens; inform the bank and financial institution immediately to take corrective action.