Sandra Block at USA Today covers the next wave of financial problems: college graduates and their debt obligations. As she writes, “The latest Education Department figures estimate that student loan default rates rose to 6.9% for fiscal 2007, from 5.2% a year earlier. The consequences of default are severe: The loan balance becomes due, and the government can garnish the borrower’s wages and withhold tax refunds.”
The default rate is almost as high as that associated with consumers and their credit cards. So what should a college graduate with educational debt do?
Our core advice remains the same: understand your total balance amounts and terms of repayment. Set up and live by a budget. Prioritize your outstanding debt amounts for aggressive pay down in a way that will work for you. Ideally, they are mathematically prioritized, but using the other methods of repayment, like the snowball approach, can work. Finally, it is critical to track and measure the success of your chosen strategy for debt elimination. Consider a debt tracking form and choose easy dates for revisiting your financial status, such as the first day of each month.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
Tags: educational debt, educational debt crisis, snowball method, student debt
