Taking out a student loan (or any kind of loan in general) is not an easy decision. The thought of having debt before even graduating can be daunting and it does require some sort of money management skills to stay on top of it. We’ve put together a list of things to consider when managing your debt.
Monthly Budget Plan
Budgeting and planning is the most important factor when it comes to managing your finances, no matter if you have a student loan or not. To create a budget simply list all your incomes (e.g. grants, salary, any support you receive from parents etc.) and then deduct your expenditures (e.g. bills, rent, books etc.). It’s easiest if you start with recurring income and expenses and then leave some blanks for one-off items.
We’ve created a template that you can download here to make it easier for you. You can include your loan repayments in this schedule, it will show you at a glance how much many you’ll have left at the end of each month or if you need to make cut some expenses.
Engage With The Lender!
If you know that you won’t be able to make a payment (for whatever reason) the most important thing to do is: communicate with us! Being pro-active is the best way to handle these situations. Our team will be able to discuss different options with you. You might be able to take a repayment holiday of three months, which allows you to get back on track. If your loan is guaranteed, maybe your guarantor can make the payment on your behalf.
In any case, there is no worse scenario than us being unable to reach you. Communication is the best way forward!
Build Up Savings
When making your budget ensure that you continuously save. It might seem hard at the start but by simply revisiting a few of your expenses (e.g. is it really necessary to get a coffee for £2.50 every morning) you can build up savings. Those savings will provide you with a cushion should you require some instant cash for an emergency. At the same time, it means that your regular loan repayments won’t be affected by an emergency.
Set Up A Direct Debit / Standing Order
Missing payments can affect your credit score and you want to avoid this at all costs. Restoring your credit score can be a lengthy process. Why is this important? If you are ever applying for a different type of loan, e.g. a mortgage the bank will most likely check your credit score. If your report shows missed payments or defaults your chances of being approved will be very slim. By setting up a direct debit or standing order, you can avoid this issue easily. In addition, it will save you time, as you don’t have to manually go into your bank account every month to make the payment.
Got Some Extra Cash?
Instead of splashing it on some unnecessary things, consider making an extra payment against your loan balance. Please note not all provider give that flexibility but at Future Finance, we welcome any extra payments at any time. Making extra payments, will automatically decrease your interest payments over the life of the loan!
Don’t Be Shy And Get Advice
If you find yourself in a situation where you can’t make payments for a period of time, please contact us! In addition, there are some services that are happy to provide you with advice such as Step Change Debt Charity, National Debt Line or the Citizens Advice Bureau.