" Gabriel is an employee of a small business and agrees with the results of numerous reports that highlight that irrespective of the increase in the overall opportunities for work, the overall living expenditures, student loans, utilities etc. leaves most graduates in a dire state of (Franke-Ruta, 2003). Another Nellie Mae report conducted in 1998 showed that nearly 40% of the graduated lawyers and doctors and 25% of graduates of private institutions were earning far less money than what they owed monthly to the students loan agencies. The report also shows that out of the total graduate lawyers and doctors, nearly 41% paid off 13% of their salaries to the student loan agencies to relieve their debts and all 41% felt like this was a huge weight on their shoulders. This burden was even more obvious on the African-American debtors and low income earners by the end of 2002 (Franke-Ruta, 2003).

Numerous reports carried out showed that there was a group of students who did not feel the weight of paying back student debts. Calculations showed that these were the students who got respectable jobs where they could earn up to $30-32,000 immediately after they had graduated. The statistics show that the estimated start by the end of the year 2001 was calculated at $26,600 for the college graduates. This figure increased if the graduates had received higher education or had specialized in a sector. The main thing to note here is that the higher the level of income one individual has means that the individual has more money to dispose as he sees fit. The surprising tally here is that if the average debt to be paid in a month is $1,000 or around that figure than the graduate would have to earn a hefty annual income of $100,000 which is extremely difficult and very uncommon for a newly graduate to earn (Franke-Ruta, 2003).

This figure or tally was even more difficult and burdensome for other students who were simple college graduates and were not specialized in any specific discipline. The students from the faculties of humanities, art or music can be included in this group. The expenditure of these departments is not less than any other department contrary to popular belief and still leaves many of the students with demanding and difficult financial situations to tackle after graduation. The income generated from careers in these fields is not extra-ordinary. In fact, recent statistics show a very clear decline in the income generated from employees working in relative fields of the arts or humanities departments as well as show low level of job security or stability (Franke-Ruta, 2003).

In addition, most students also account for credit card defaults and debts, which further obscures the dilemma of student debt. Studies have shown that nearly half of the college freshmen and more than ninety percent sophomores use their own credit cards (Franke-Ruta, 2003). Students have got to make responsible decisions about their finances if they are to successfully cope with their educational debts and loans. Wasteful monthly credit card expenditures will not assist their cause at all. They have got to plan out their debt retirement early on during their college years and look for alternative approaches which are available to them.

Alternative approaches responding to student debt

Many approaches exist that may assist students in responding to their debt problem. Ebony (1999) summed up most of these approaches, which may assist students in eliminating their financial woes. He asserts that students should create a financial cushion of at least three months; meaning they should save money to handle their daily expenses and other emergencies should they become jobless or acquire illness which stops them from going to work (Ebony, 1999).

Furthermore, he asserts that students should try to pay off debts, which have higher interest rates and higher principal amount. This is because in the overall scenario they will end up saving a lot of money this way. In addition, he considers mental health and well-being is stressed as vital and stresses that student debt is not as bad as it sounds, provided payments are made on time. In fact, students are allowed to deduct the interest rates on student loans when it is time for them to pay their taxes (Ebony, 1999).

Ebony (1999) asserts that it is unwise for students to start saving money while they still have loan payments to make. He asserts that the interest gained from saving investment can never be equal to or more than the interest they have to pay for the loans they had acquired. However, it is imperative...

Expensive dinners and other wasteful expenditure should be avoided at all costs. The money they save from these events can go a long way towards paying off their debts. In fact, he asserts that students should keep a tract of their monthly expenses so that they know where they are using their valuable and hard earned money. Furthermore, they should make a monthly and annual budget of their needs and follow that budget meticulously. While making their budgets students should consider their monetary goals both in the long-term and short-term (Ebony, 1999).
Students should avoid the drastic mistake of adding newer debts while they are still occupied in paying off their educational loans. They should live within their means and only afford things they need. Debts with higher interest rates and larger principal amounts can be refinanced, which will help students maintain a good credit history. Lastly, if students feel that the debt trap is to complex and it is affecting their mental health and well-being than they should seriously look towards seeking professional help and assistance (Ebony, 1999).

Similarly, Hayslett (2005) asserts that students should choose their debt repayment plans keeping their income in mind. They should choose income-based loan plans instead of interest-based plans. They can then have the flexibility to maintain their living standards and make their payments on time. Furthermore, students should maintain constant contact with their lenders in order to ensure that they pay on time and uphold a good credit record. Delay in payments can result in extra fees and penalties (Hayslett 2005).

A good way for students to make payments on time is by allowing creditors to extract payments from their bank accounts. This helps ensure timely electronic payments. Furthermore, some creditors have lower interest rates on loans if electronic methods are chosen for payments. If a student comes across a situation where they know for certain that they will not be able to pay their monthly funds on time; then they should try to inform their creditors before time and try to negotiate a newer payment plan instead of just hiding from them (Hayslett 2005).

If students are unable to pay their creditors on a monthly basis they can choose to take a break from payments. Student loans payments can be postponed through deferment and/or forbearance. In both these cases the federal government continues to pay the creditors on behalf of the students until they are financially stable and are able to pay back on their loans. In case of deferment, students are allowed a three-year grace period, while in case of forbearance students are funded in increments for up to one year (Hayslett 2005).

The students should always look towards merging all their loans acquired during their educational years. This is known as loan consolidation. This immensely assists students in lowering not only the amount they have to pay each month, but also the time it takes to pay back all the student loans they had acquired. Lastly, students should always plan their loan options. This planning should begin before they decide to take their first student loan. They should first budget their monthly and yearly educational expenses and then move towards applying for a student loan. Furthermore, students should fully exploit the scholarships and grants facilities available each year and billions of dollars are left untouched because there were no applicants. Students who end up acquiring loans should not get too worried about their credit record as educational debts are considered good debts as they offer lower interest rates and very flexible payment options (Hayslett 2005).

The best alternative approaches to the problem: Debt consolidation

Getting rid of debt is one of the main issues graduating students face when they are on the verge of acquiring their degree. These students have several good options to choose from; however, the most effective option for these students is debt consolidation as it gives the most benefits to students. First of all, it quite often decreases their interest rates. Students quite often end up getting one interest rate instead of getting several different ones, which are quire high in comparison. Debt has been a major source of depression, anger, stress, lack of concentration and sleeplessness for students. Acquiring…