7 Student Loan Mistakes: How To Avoid?

Student loans have always been in great demand since most students and their parents can’t afford to pay for their tuition in full. Therefore, most college graduates, along with a diploma, take away huge debts for their studies. But at the same time, you always need to wisely evaluate your capabilities and never borrow more than you can return. For that reason, never make the following student loan mistakes.

how to avoid student loan mistakes

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Taking an Incorrect Repayment Plan

Private student loans can only have one repayment plan, while federal student loans are more flexible. Salary-based payment plans are very popular too. Many students ask themselves: “How can I avoid paying interest on student loans?” So remember that the less you pay per month, the more it will take to pay off the loan. Accordingly, you will pay more interest. Since your goal is to pay as little as possible overall, choose a repayment plan that offers the highest monthly payment for you which you can afford.

Borrow More Than Necessary

Before taking a loan, exhaust all possible other options and calculate to a penny how much money you will need. Also, work out the option to reduce the cost of education. Many universities offer lower tuition fees for certain jobs. If you still borrowed more money than you need, then do not rush to spend it, but return it to your creditors. 

Unfortunately, many of the students surveyed by LendEDU spent educational loans for other purposes. Excessive spending makes it harder to pay off your debt – this is one of the main financial literacy rules. 

Therefore, remember the two most important rules for handling student loans.

  • Never borrow more than you really need.
  • Never borrow more than you can actually return.

Compliance with these two points will be enough to protect yourself from potential problems, irrational multiplication of your debt, and financial burden after graduation.

Using Consolidating Loans

When you use this service, you take out a new loan to pay off the old one. But many students do not understand that the old loan does not deteriorate anywhere and becomes part of the new loan. Accordingly, with a larger balance, you will eventually have to pay more interest. Therefore, your debt amount will grow much faster. So, this is a bad strategy to follow. 

Being Lured by the Offers to Decrease Your Student Loan

If you have federal student loans, you can receive loan discounts or a discharge plan that can decrease your monthly payments by up to 10-20%. You may be offered help from various companies for an additional fee. Remember that you can do this for free through the Department of Education yourself. So, if someone offers you help in reducing or taking out a loan, bypass this offer. 

Get Into Debt With Free Gifts

Banks keep pace with the wishes and needs of the students. They may offer you trendy T-shirts, stationery, video games, cell phone accessories, chargers, etc. The bank will gladly spend $10– $20 on a gift for a client, to receive thousands of dollars from him in the form of interest only in the coming years. Curiously, banks are always stepping up their advertising activities towards students shortly before the holidays. As a result, millions of dollars in loan money is spent on “parties” often organized by student societies.

According to federal statistics, 70% of today students today have credit cards. However, only 17% of their owners are familiar with the terms of use. The remaining 83% are unaware of the interest rate, fees, taxes, activation fees, maintenance fees, outstanding debt, and other tricks. That is why so many students are struggling to pay off their students loans and other expenses for several years after graduation, postponing buying houses, and starting a family. 

Allowing Yourself to Have Poor Academic Performance

Many employers are interested in qualified personnel who have received a good education. When they hire them for a job they are willing to offer assistance and pay part of their student loan. So, you have to take education seriously at college to avoid incompetence later. Not many students know that they always have the support and if they need help with academic assignments,  they can choose Best Writers Online or Online Writers Rating custom writing reviews website, for example, and get competent assistance.

Conclusion

Student loans are inevitable in most cases, however, they can have a huge impact on your finances for several years to come. When going to college, be very careful with your finances. After graduation, the loans will not disappear and will hang over you. Before taking a certain amount of money, come up with a very forward-looking strategy, and honestly answer the question of how much you can afford to borrow in order to repay the debt as painlessly as possible.

by Frank Hamilton

frank hamilton

Frank Hamilton is a blogger and translator from Manchester. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.