Sister of Mercy's World

Got Debt?

Wednesday, June 29 2011


Debt is something that most of us seem to land in after we turn 18 years old.

The first type of debt I would like to address is student loan debt. It's usually one of the first debts we get into as a result of attending college.

Here are some tips on how to handle it properly.

1. Only borrow what you need.
2. Go for substized loans (where the government pays the interest) first (if you qualify)
3. Perkins loans are also good because there isn't any interest while in school and the interest rate is lower than a Stafford loan. (however, not everyone qualifies for this loan)
4. Try not to take out private educational loan unless you do not have any other options. They usually don't have forbearance or deferment options.
5. Consider consolidating your loans after graduating. Instead of paying several payments and interest rates, you will only have to pay one payment and one interest rate. You will save money on the interest you will pay over the long run. William D Ford Direct Loans is a great loan company for consolidations.
6. Remember to report the interest you pay on your student loans on your tax return. You don't have to itemize to do this. Just file a 1040A.
7. Do not default! This is a debt that can't be discharged in bankruptcy. You income tax refunds can also be seized until your loan is paid. Your wages will also be garnished.
8. If you see that you are having financial difficulty, call the loan company (s) immediately. Most of them have alternative payment plans, but you have to call and ask. Also the lenders would rather work with you before you fall far behind.


My next Got Debt? entry will discuss credit card debt.


Sister of Mercy