Between classes, tests and work college students have enough to worry about. Unfortunately, debt among college students is rapidly rising making it a growing concern for many young adults. Credit cards make it easy and convenient for the cash strapped college student to buy things, few of which every stop to think of the long terms effects of their purchases. Student loans are also becoming one of the biggest sources of debt and bankruptcy filings among graduates today.

Staying Out Of Trouble

The first aspect to controlling debt in college is education. Teaching kids about smart money management skills early on can help establish a lifetime of financially healthy habits. Even after they get to college, there is still plenty one can do to prevent debt from getting out of control.

First, develop a monthly budget that clearly outlines expenses. It is important that the budget include a "fun" category, or category for spending on entertainment and activities. Tracking monthly spending and prioritizing purchases is a huge part of smart money management. Next, outline rules for using credit cards. Credit cards should be viewed as a financial tool for boosting credit and maintaining a responsible borrowing history, not a matter of convenience. Setting up guidelines for what purchases are acceptable for use of a credit card and a maximum purchasing limit can keep unnecessary spending in check. Last, maintain an open line of communication. It is important for students and parents to remain honest about finances so that help can be given for an emergency. It is far better for a parent to help finance an unexpected, important purchase than to secretly charge it to a line of credit than can cost hundreds more in interest fees.

Looking Smart

Another aspect to managing credit and staying out of debt in college involves choosing the right type of credit line. When looking for a credit card it is important to find one with the lowest possible interest rate. Since college students are just starting out in the credit world, most offers may boast unreasonably high credit lines in exchange for a high interest rate. These types of cards are unnecessary and will only lead to financial trouble.

Finding the right student loan is becoming increasingly difficult. While grants are preferred, they aren't always available. Many private lenders are boosting interest rates in attempt to minimize loss in the event of default, and federal loans can be difficult to obtain. The best type of student loan is one that has a low, fixed interest rate and offers a temporary buffer between time of graduation and due date for the first payment. Since student loan debt is rarely dischargeable in bankruptcy, finding solutions when defaulting becomes an issue is quite challenging. Therefore, it is best to shop around and find the best type of student loan that offers payments expected to be within reach after graduation.

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