How to Avoid the Debt Trap After Taking Out a Student Loan - Money News

Pursuing higher education abroad can be expensive. Thus, students facing financial difficulties may consider education loans to be a viable solution. However, it is crucial to be aware of common problems and take appropriate precautions so that they do not end up falling into the debt trap. Protecting those who aspire to study abroad from financial hardship is of the utmost importance.

Below are several key considerations that students should keep in mind to avoid an increase in their financial obligations.

It is important to distinguish between essential and non-essential items and borrow the required amount. This will help you avoid unnecessary debt.
Neglecting grants, scholarships, and other financial aid options can result in missing out on excellent opportunities to reduce expenses.
Understand the terms and conditions of the loans borrowed. Repayment plans and other details should be crystal clear.
Choosing an expensive institute or accommodation could burn a hole in your pocket.
Postponing or deferring payments may give you instant results, but it will only increase the total loan amount.
Avoiding these pitfalls could enable effective management of student loans.

How to avoid falling into the debt trap?

Overcoming a financial burden can be daunting. However, with careful and strategic planning, it is achievable. Several factors can be taken into account to simplify the process and avoid falling into the debt trap. These include:

Create an emergency fund, allocate a certain amount moneyand set a separate budget. This will help you keep things running until the situation stabilizes.
Plan for repayment. This will help you focus on paying off high-interest debt first, and then other debts.
Avoid impulsive spending. There can be several reasons behind this type of purchase, including insecurity from peers, instant gratification, etc.
Developing and preparing a budget will help you track your spending and manage the situation when needed.
Debt consolidation is a financial tactic in which multiple loans are merged into one loan. This will help you get everything sorted out at once.

Mamta Shekhawat, founder of Gradding.com, a study abroad platform, says, “It is easy to fall into the debt trap, but it is very difficult to get out of it. So, taking precautions is essential so as not to empty your pockets while you are in a foreign country. It is essential to prioritize needs and spend accordingly. Additionally, one must have a proper financial plan to avoid losses.