How College Graduates Can Improve Health by Limiting Debt

How College Graduates Can Improve Health by Limiting Debt

college graduates and debtWhen the economy began to sink several years back, health problems for those experiencing severe money issues increased. The correlation between being in debt and experiencing health problems seems to be one that is obvious, but a recent study shows that being in debt may actually cause your blood pressure to sky rocket.

The study, conducted by Northwestern University, found that young adults that had high debt totals also reported having diastolic blood pressure numbers that were considered higher than normal. Some people may wonder how being in debt can cause health problems since debt doesn’t come with germs, but the stress that can be associated with the money issue can have a major impact on your health. The stress of being in debt can also lead to depression, which is just another problem that could lead to high blood pressure readings.

There are obvious problems that can arise from being in debt including the actuality of being unable to seek out medical attention when illness falls on you. Without money and without wanting to fall into more debt, small illnesses left untreated can lead to more serious problems and conditions that will have a deeper impact on your health.

While the majority of those experiencing debt and health issues are of older age, there are a good amount of college-aged students just graduating or set to graduate soon that will be experiencing these same issues. According to an Associated Press report from 2012, more than 53 percent of college graduates under the age of 25 with a Bachelor’s degree were either jobless or under employed. To show how bad that market has gone, in 2010, the percentage of the same group was just 40 percent.  The Chronicle for Higher Learning reported that 60 percent of college students in the United States borrow more money than they would make in a year.

Tips to Eliminate Debt

For those freshly out of college looking at large loan payments each month, there are some things to keep in mind when you are getting ready to start paying it back.

  • Don’t Defer Payment

Before you even need to make your first payment back on college loans, the bank will offer you the opportunity to defer your payments. While this may sound like an ideal plan of saving money and reducing stress right now, it will become problematic for you later on. This is especially the case for unsubsidized loans. When you defer payments on these types of loans, you are looking at paying an extra $1,000 to $1,500 in interest on a $10,000 loan in just two years.

  • Income Based Repayment

A lot of people may think that the idea of paying your loan back with only a portion of your salary over the course of 25 years will work out for you, but in long run, this will only enhance your stress. Most college loans are to be paid back within 10 years, so jumping that number up to 25 years alone should be enough to scare off some possible users. For most average college graduates, this type of loan will mean you will finally finish paying off your loan when you are at least 45, just in time to start worrying about the tuition for your children.

  • Don’t Overpay Each Month

A lot of men with car loans, mortgages and yes, student loans will think that by paying a little more each month when money is good that they will be better off. In theory, this is a great plan, but when you fall on hard times like losing your job or illness, you will wish you had extra money back to pay bills while you attempt to recover. You never know how long you will be without a job or sick and you will wish you had that extra money back. The ideal amount of money you should have saved up for an emergency would be six months of essential payments including rent, auto loans, groceries and school loans. You may still become stressed out as you look for work, but you won’t be overly stressed about the money until your bank account begins to run down.

  • Pay More than the Minimum

Before you think I am crazy and am talking funny, there is a big difference between putting all your extra money into a payment and paying more than the minimum. If your loan payment is $750 each month, pay an extra $50 on your check each month. That $50 will come directly off the principal balance, thus allowing for less interest to be charged over the course of the loan. For example, if you pay the extra $50 a month on a Stafford loan with an interest rate around 6.5 percent, you will pay off your loan in about six years and cut off about $1,500 of interest.

  • Consolidate When Possible… the Right Way

Several times within the first couple years of paying back your student loans, you will be asked if you want to consolidate your private and government loans. This could work for some considering they will be getting a lower interest rate than they were previously with upwards of four loans per semester, this could make the payment process much simpler over the course of your loans. You would also want to be careful about when you consolidate your loans as you are only allowed to do so once, meaning if you do it now and in two or three years, the interest rates drop two percent, you won’t be able to get that rate.

 

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