What to do about high student debt levels?
First off I would like to introduce myself to the Varsity View readers out there. I am extremely excited to be part of this team and will do my best to stimulate your minds. On that note, my first article will be on the ever looming, seemingly ever increasing, student debt that some of us face these days. I decided to write about this as I will be graduating at the end of the year and will have to start dealing with these issues in the near future.
I never really paid much attention to this subject during my final years of high school as I was used to living the dream (i.e. parents paying for everything). The notion of having a student loan behind my name meant nothing to the 18 year old me. It was only after my booze infused first year at Maties that I realised the implications of having a large student loan.
Considering the fact that a student loan needs to be paid off in the same amount of time as the underlying years of study, the repayments have a massive impact on one’s financial freedom after leaving university.
Now the purpose of this piece is not to scare us or to send you into a week-long philosophical “what am I doing with my life” mission, it is actually meant to give you piece of mind knowing that there are ways to deal with it. I recently read an article by Rob Carrick on dealing with high student debt levels and these are his points that I identified as most relevant to us as current students:
While you are still in your years of studying it is a good idea to get a paying vacation job in order to cut down on the loan amount. Ok yes that sounds terrible but we all know that it will really make a difference in the long term.
Even though you are always reminded that you should start saving for retirement as soon as you start working, the loan repayment needs to be the primary goal and not saving. This comes due to the fact that the sooner you are free from student debt the sooner you have higher power to save. Now this is obviously going to be a difficult thing for us to do, so here’s an idea put forward in a comment by a reader of the same article: “In order to incentivise a quicker repayment, why not make a deal with yourself. For every R1000 over and above the minimum repayments, you can invest another R250 in anything that you choose to be appropriate (e.g. the car you’ve always wanted, a holiday at the end of the year, or even a new suit).”
So the fact of the matter is that while it is going to be very difficult during our initial years work to give such a hefty chunk of our salary away to the bankers never to be seen again, there seem to be ways to make this task less daunting to us.