If You're Not Careful Interest Rates can be SCARY!
I have friends that have taken out close to a quarter of a million dollars in student loans. And they have no idea how they're going to pay them off! How scared would you be if you were in that situation???
To get a better understanding of what this means, lets take a look at another example:
Tim is 24. Since graduating from college 2 years ago, the interest rate on his student loan has jumped from 6.75% to 12%. As a result, his student loan debt has skyrocketed from $30,000 to $45,000. What started of as $350/month student loan payments has now morphed into an unmanageable $500 a month. With other expenses such as rent, car payments, utilities, gas, and cell phone bills, he has no clue how he's going to pay off the student loans. He's in a hole deeper than he can climb out of! Is there any hope for Tim?
Well, yes and no. If you are ever in a similar situation, then the only practical thing you can do is work to pay off your student loan debt first. The reason for this is simple: student loan debt doesn't disappear overnight. Even if you found yourself filling for bankruptcy, bankruptcy will not erase your student loans. I know it's tough, but if you are in that situation you may find yourself looking for a second job to pay down your debt...
This is entirely why you should NEVER take out student loans to live off of. Unless you want to spend the rest of your life paying off loans, think before you take out another student loan. Your financial future is at stake. Take proper recourse now and offer yourself the opportunity to have financial freedom in the future.
On a Happier Note...
It is never too late to take control of your debt. If you're determined and focused you can get out of debt. If you haven't taken out a student loan yet, then you have time to reflect and make better decisions. You are in control of your financial destiny. So remember, whether you sink or swim in this financial climate, is entirely up to you. You can do it!