Student loans, however, convenient invites a lot of complicated process with it. The biggest one being repayments. A student loan can make or break your future. It is a complicated process and the critical decision should be made only after comparing all the factors. Therefore, we are listing student loan mistakes so that you can learn from them.
You can’t go back and fix the decisions you have made in the past. This is why we recommend you to avoid this most common student loan mistakes done by others. Before you sign on the dotted line, take time to understand your student loan options.
5 Biggest Students Loan Mistake
1. Assuming you need them
About 60% of the students borrow annually to cover the college cost according to the U.S department of education. About half of them sign the bond even when they are doubtful. this is one of the biggest student loan mistake that most people do.
Before going for a students loan understand your needs. You can rather choose a cheaper school and pay in cash. Believe me or not loans feel like a sack full of stones which you carry on your back. Therefore considering all the factors you should take up the critical decision.
2. Not Considering other options
Most students just go for a student loan rather than considering the other options, which is one of the biggest student loan mistakes. Even before you apply for the student’s loan, you should be shooting for every single grant or scholarship you can possibly get. This means spending time tolling the web, talking to your local librarian and looking for schools that offer scholarship programs.
3. Not keeping a track on what you borrow
Be real and practical. When you take out student loans to help pay for college, it’s easy to forget that the money will eventually have to be paid back and with interest. The money just doesn’t seem real when you are in college. College life is more of having fun than making a career for most students these days.
Therefore, it is recommended to keep a track on what you have to pay back. If you have a federal student loan, then you can simply log in to the financial aid review and keep a track.
4. Not understanding Priorities
Not understanding your priorities is one of the biggest student loan mistakes. During your college life, you should be disciplined and keep repayment of your loan as the top priority. Because if you keep on neglecting it, you will be at a loss. Suppose, you have a part-time job, then spending money on Lifestyle rather than repaying your loan can be the mistake which you regret entire life.
Thus saving as much as you can and repaying at the earliest possible time can be a real savior for you.
5. Skipping out on interest Payments
Unless you qualify for subsidized student loan your loans will start acquiring interest immediately. The biggest problem here is that your interest will capitalize, which means that outstanding interest is added to the principal of your loan. So, if you are skipping out on your interest payments you are doing one of the biggest student loan mistakes.
You should always pay the interest along with installments. This ensures that you don’t end up paying a larger sum. The more you delay the interest payments, more the amount will you pay at the end. Thus early realization is very important in case of student loans. The loans and nothing but compounded. Every time you default a payment, interest is added up on it and you end up paying more. Hence, avoid the five biggest student loan mistakes mentioned above.