Dealing With Debt After College

There is an old expression that a fall will not hurt you, just the sudden stop at the end. College graduation is one of those rare moments when everything stops, only to begin again at a fantastic speed. It can be difficult to get back on your feet and onto the right path at such times.

Debt after college often brings about common problems for the borrower. In a separate debthelp.com article, we look specifically at the issues that surround college loan debt. Here, we will discuss some of the other sudden surprises college graduates face.

Living Decisions Looking for a job gets expensive in a hurry, and choosing the wrong place to live in relation to that job also can be very costly. Compare cost-of-living with “fun” living, and you might not like what you discover. Consider sharing an apartment or a short-term rental with family or friends. Take every opportunity to save. And even though it might not be the most enjoyable way to spend an evening, learn how to cook for yourself.

Debt Controls Concentrating on saving instead of spending will keep you thinking positively. Even if you are satisfied with your entry-level job right now, you still should be prepared to look for another job within six months. After a little bit of time at a job, it is not always as good as it seemed originally.

Consider Consolidation of New Debts Although the “ideal” time to consolidate student loans already may have passed you by, it is likely that the end of 2007 and the beginning of 2008 will be a favorable time for 2005-2006 graduates to exchange their existing loans for new rates. Graduates should consider consolidation both as a way to eliminate debt and to increase savings.

Identity Theft Even though recent college graduates may have fewer assets at risk to identity theft than do their seniors, they also are more likely to suffer damages through identity theft. Recent graduates have smaller safety nets, are more likely to leave financial ‘fingerprints’ online, and are less likely to monitor their credit on a consistent basis than those who are more established.

Budget Plan When just starting out in life after graduation, it is crucial that you consider all future expenses and the possibility of increases where applicable. Plan a budget complete with the costs of looking for work in the field of your choice. If you are unfamiliar with budget planning, it is a good idea to seek budget counseling to help you with your task.

Separating Fact from Fiction Graduates must exercise caution as they embark upon life after college. College graduates are attractive potential customers to banks and retailers, but look before you leap. Low-rate credit offers that seem great at first typically expire within 6 to 12 months -- the same time student loan debts tend to accelerate in pressure.

If you borrowed money through your college financial aid office, you will be required to complete an “exit interview” that will summarize your loan obligations and options. It is important to know how long you have between graduation and repayment, so that you can structure your budget and repayment plans properly.

Most students take advantage of their ‘grace period’ by choosing not to pay. This is the best time to save money for repayment by choosing to live on your budget six months “early”. When repayment does begin, you will have a cushion for your debts, as well as a head start on survival skills.

Many colleges, especially smaller schools, take an interest in the debt challenges facing their graduates. Your financial success is important to your school, so check to see if there is a resident counselor who can help to make your transition between college life and work life easier. Set up an interview, and ask any and all questions you may have.

Graduation is a big accomplishment for all graduates, so do not allow unnecessary financial concerns to overwhelm your new life. Plan, understand, ask questions, and commit to your financial decisions.