It’s an unfortunate but inescapable fact of life that most who choose further education are now graduating and beginning life with debts. Often, they won’t be the only debts that are quickly amassed when you’re starting out in a career, trying to find an independent living situation and all the other expenses that come in this period of time. But should there be a focus on paying off tuition fee debts early, even during challenging Financial Times when you’re learning to budget? Well, the answer is yes, for these reasons…
Lower Your Debt Risk
If you already have significant amounts of student debt from tuition fees, you’ll find it harder to get lenders to give you additional money that you may desperately need for housing or setting yourself up in a job. Your debt to income ratio is an important factor in being able to access lower-cost borrowing and also frees up more of your disposable income every month, the less you have. This means that you’re more able to work towards other financial goals you may have, such as saving for a home deposit or a car.
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Minimise Inescapable Debt
If you encounter some truly unfortunate circumstances – serious illness or loss of a job – early on in life, your financial situation can quickly spiral out of control. But even declaring bankruptcy doesn’t spare your student loans – they still need to be paid back. This makes it a smart idea to pay back those loans, because you’ll still have to keep on top of them even under dire circumstances which is extremely difficult. Paying them down means you’ll be better able to deal with other money challenges in your life.
Escape Servicing Charges
It isn’t just the amount you owe on your student loans, it’s the money you lose out on over the long-term servicing that debt. Money that you spend on paying down a loan is essentially dead money – it’s not working for you. Whereas that same money invested into funds is generating a return for your future. And time compounds that situation, so as long as you’re making repayments, you’re missing out on that money working for you. Speak to a specialist service like RefinanceStudent.Loan to make sure your repayment schedule is optimised against your other financial needs and commitments. The sooner student debt is paid off the sooner you can concentrate on making your money work for you in other ways.
Live a Less Stressful Life
If there’s one thing for sure, it’s that living with debt is toxic for our stress levels. As life can be quite stressful enough when you’re just staring out trying to build a career, you want to try and minimise other sources of it. Getting focused on a debt repayment plan can help in itself – if you know there’s a way out, it can help to ease any anxieties and you know that you’re more in control of the situation and able to handle other curveballs.
