The Importance of Budgeting to Avoid Defaulting on...

The Importance of Budgeting to Avoid Defaulting on Student Loans Students defaulting on their loans will always be a problem for the government as long as there are students taking out loans. There will always be a few that don’t pay off their loans. There are many reasons why students default on their student loans. According Ms. Farrell, the author of â€Å"Reducing Student Loan Defaults: A Plan for Action,† in the Office of Planning, Budget, and Evaluation Survey, said â€Å"The main reason that students default on their loans is that they cannot budget their finances† (Farrell 24). Even though a number of students are working while going to school, they don’t understand the financial burden that loans will place in their lives. In†¦show more content†¦President Clinton said, â€Å"We have tracked down defaulters and made them pay† (17). The partnership between President Clinton, the US Department of Education, different Universities, and college students, can educate other students through different programs. They can teach students how they can budget their student loans into their finances and show them what the penalties are for not doing so. It makes sense for students to budget their finances in the first place, so that they will not fall into a pit of defaulting on their student loans. There are ways that students can budget their finances. First of all, students need to know what budgeting is, and how it can help them. Budgeting can be defined as the ability to estimate the amount of money to be received and spent for various purposes within a given time frame (Finney 175). Budgeting can help students coordinate their activities, developing financial objectives, reveal inefficient, ineffective, or unusual utilization of resources, make family members aware to use money wisely, and allow recognition of problems before they occur. Although good record keeping is required for the budget to be of use, once students get themselves on a regular schedule of budgeting their finances it becomes just anotherShow MoreRelatedLoan Portfolio Management23089 Words   |  93 PagesLoan Portfolio Management Introduction Background: L ending is the principal business activity for most commercial banks. The loan portfolio is typically the largest asset and the predominate source of revenue. As such, it is one of the greatest sources of risk to a bank’s safety and soundness. Whether due to lax credit standards, poor portfolio risk management, or weakness in the economy, loan portfolio problems have historically been the major cause of bank losses and failures. 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