DEBT MANAGEMENT

According to the Student Loan Company (SLC), as of 2023, there were over 225.85 billion British pounds worth of outstanding student loan debt in the United Kingdom. The majority of this debt, 205.57 billion pounds, was owed by England, while 7.56 billion pounds, 8.04 billion pounds, and 4.68 billion pounds were owed by Scotland, 7.56 billion pounds, and 8.04 billion pounds, respectively, by Wales and Northern Ireland. The act of efficiently managing and controlling one’s debts is referred to as debt management. To lessen debt loads and enhance overall financial wellbeing, it involves tactics like budgeting, prioritizing debt payback, communicating with creditors, and making prudent financial decisions. Avoiding excessive debt, lowering interest rates, preserving credit, and achieving financial stability are the objectives of debt management. Based on the statistics provided above, we can understand the importance of debt management skills among students. Debt management helps them avoid financial stress as it ensures that they do not accumulate unmanageable amounts of debt. Responsible management of debt allows students to manage their financial freedom and make financial decisions without being burdened by excessive debt obligations. It also helps students build and maintain a good credit score, which is crucial for financial endeavors. Debt management allows students to concentrate on their studies without being burdened by financial worries, leading to better career prospects. It teaches them valuable financial skills and habits that will serve them well throughout their lives, promoting financial discipline.

Responsible use of credit cards is another important element that should be covered under debt management. Responsible credit card usage is an effective way for students to start building a positive credit history. It is also a key component of financial literacy as it helps them understand the concept of borrowing money, interest rates and the consequences of financial decisions. Credit cards serve as emergency backups for students when they do not have sufficient savings. They also offer convenience for online purchases, travel bookings, and more. They provide added security by reducing the need to carry large amounts of cash while traveling. Many credit cards offer reward programs, cashbacks, or travel benefits, and when students understand how these features can be used, they can make the best use out of these cards. Learning responsible card usage is useful to avoid high-interest debt and encourages them to make timely payments and manage their credit balances wisely.

Financial discipline can be fostered when students manage their spendings within their credit limits and make payments on time. Awareness regarding responsible card usage includes safeguarding personal information and monitoring accounts for potential fraud or identity theft, which helps students protect themselves from financial harm.

This explains how responsible credit card usage is an important element of financial education among students. It empowers them to use credit cards as a financial tool wisely, build creditworthiness, and make informed decisions that will benefit their financial well-being in the long run. Another crucial element that falls under debt management is management of student loans which is essential in or- der to maintain financial stability and minimize the long-term effect of debts. In order to manage student loans, students can start by knowing the details of their loans, including the type, interest rates, terms, and repayment options. They can create a spreadsheet or use loan management tools to keep track of this information. Development of a realistic budget that includes all their income and expenses helps them to allocate a portion of their income specifically for loan payments. A budget also helps them stay organized and ensures that they are making timely payments. Students should choose the repayment plan. For example, the federal student loans offer various repayment plans, including Income-Driven Repayment (IDR) plans that base their payments on their income. Students can explore these options to find the one that fits their financial situation best. Setting up automatic payments for student loans ensures that they never miss a payment and may even qualify them for an interest rate reduction.

If they can afford it, making extra payments towards their loans can help them pay down the principal balance faster, reducing the overall interest they will have to pay. If they have multiple loans, they should