This is the first in a blog series on student loan debt and other money matters faced by college graduates. Check out the second blog article in this series, “Recent College Graduates Need to Avoid Racking up Credit Card Debt.”
It’s college graduation season, a time when many young people are celebrating their hard work by attending commencement ceremonies and formally receiving their diplomas. One of the things that graduates typically hear at these ceremonies is that they should be excited about what the future holds for them as they leave school and enter the “real world,” get jobs and start to earn a living. What graduates are not always told is just how difficult it can be to make this transition from the insulated college campus to the real world – especially when graduates haven’t yet learned what it’s like to deal with serious financial responsibilities.
One thing that college graduates may want to consider as they leave school and begin to personally manage their own finances for the first time in their lives is that interest on loans can lead to a mountain of crippling debt.
Here’s the thing about your student loans: you need to start paying them back as soon as you graduate or the interest is going to accumulate very quickly and leave you in a bad financial position going forward. If you’re not careful, you could end up trapped in a “vicious cycle of debt” as the amount you owe on your student loans, as well as other debt like credit card debt, continues to grow. Moreover, you need to focus on paying off not just the principal balance on the loan but also the interest because the mounting interest charges will be added to the principal balance that you owe.
Andy Josuweit, the CEO of Student Loan Hero, observed that “it’s easy for balances to spiral out of control because of interest,” especially if the borrower is not taking steps to pay down the principal balance each month. Josuweit, who knows a thing or two about student loan debt because he left school with more than $100,000 in student loans, added that debts from student loans, auto loans and credit cards can “increase rapidly,” leaving the borrower in the terrible position of “effectively paying interest on interest.”
Student loan debt has become a serious issue in this country. Many young people are worried about how their student loans, which often total more than $30,000 by the time they leave school, might hinder them in the future. The good news is that understanding the realities of financial debt is the first step to handling these money matters and building a promising financial future.
For more information, view thesimpledollar.com article, “Six Things Every College Graduate Needs to Know about Money.”
If you are struggling with debt, or you are simply concerned about your financial future, you should talk to a knowledgeable bankruptcy and debt relief attorney immediately. Joel R. Spivack is an experienced bankruptcy lawyer who will help you explore your legal options. Contact Mr. Spivack now to schedule a free consultation.
