Long nights, study sessions, too much coffee, exams and lectures. The joys of being a student. As you make your way through your education journey and tackle all the responsibilities head on, it’s easy to forget that you’re racking up a considerably sized student loan; a loan that will have to be paid back at one point or another.
You might be thinking that you don’t have to worry about paying your debt until years down the track, but it may be sooner than you think. The minimum threshold for paying back student loans is decreasing from $51,957 to $42,000. This means that when your income reaches $42,000 per year, you’ll have to start paying back that loan. This compulsory threshold applies to all HELP and VET Student Loans debt. It should also be noted that the higher your income, the bigger your repayments will have to be. At $42,000 you are required to pay back one percent of your income which works out to be about $8 a week, or just over $400 a year. The repayments increase by half a percent for every six percent increase in salary. It may not seem like much, but trust me, it adds up.
While it pains me to remind you of the financial burden of being a student, it’s important that you are prepared when the money monster comes knocking on your door.
Here are five tips to help you conquer the beast that is student loans.
#1 Be Prepared
Preparation is the key. By reading this article, you’re already on your way to being prepared (well done). We don’t advise you to stress out about your student loan and think about it every day, but understanding what is required of you and when you will have to start paying back your loan will make for a smoother transition.
#2 Be Realistic
This ties in closely with our first point. Be realistic about your financial situation and don’t get caught off guard. Realise that you will have to pay back your loan at some point and manage your expectations accordingly.
Get in the habit of making a budget and sticking to it. Prioritise your finances. Do you really need that ultra-high-definition Netflix plan? (Okay, maybe you do, but you get my point.) Sticking to a budget is one of the surest ways of paying back your student loan and still being able to afford the necessities, and luxuries, in life.
Make it your priority to pay back that money monster. If you are able to pay more than the minimum repayment then do so. Doing this will enable you to squash the beast as soon as possible and allow you to be debt-free sooner rather than later.
Try not to worry about it too much. It’s important that you are aware of how much money you owe and understand the process of paying it back, but don’t stress so much that it becomes a detriment to your health. Just chill and know that in time your loan will be paid and you can continue living a life of online shopping splurges and smashed avo on toast for brunch.
Image Source: the Van Horn Advocate, Pexels, Without a Hitch