Student Loan Mistakes to Avoid And Tips To Reduce Loans

BY ROBERT PARMER

 

When I first attended college, I was supporting myself completely. This is the case for many students around the globe, especially when coming from povertous living situations. The same can be said about degree seekers that are the first in their family to attend college.

While attending college I needed help paying for school and the associated costs, and this is by no means a unique situation.

An article by LendKey points out that “over the ten year period from 2004 to 2014, students’ average debt has rose 56%, from $18,550 to $28,950.”

And these figures keep growing, because despite what societal class a person may fall into, the desire for people to better their lives through a college degree is all encompassing.

With the second term of the school year just ahead, many students who are struggling to make ends meet are debating taking out more loans. This should be handled with care, as not all loans are created equal.

These mistakes to avoid will help you make better choices whether you’re putting yourself through college and needing more money, or just trying to avoid the massive waves of debt and frustration associated with the costs of higher education.

Understand the Different Types of Student Loans

The first step to success is understanding the different types of student loans out there. As a young college student, I can say that I wasn’t fully informed about the intricate differences between common types of student loans.

The most important thing to understand is the difference between subsidized and unsubsidized student loans.

Subsidized loans are reserved for students who have direct financial need and are more forgiving when it comes to paying off the interest. The government pays the interest on subsidized loans while students in need are attending school, and continues paying interest for a six month grace period after a person stops taking classes.

Unsubsidized loans can be taken out by any student, regardless of financial need. The students themselves are responsible for paying interest, which starts occurring even while still attending college.

Avoid taking out unsubsidized loans whenever possible. Just because you can take out unsubsidized loans doesn’t mean you necessarily should.

Check out the Federal Student Loan Fact Sheet for more in-depth information on the intricacies of the range of student loan options out there.

And if you get to a point where you absolutely must refinance student loans, there are many companies that exist and they are designed to help students.

Mine for Scholarships and Look for Grants

Scout the internet far and wide for all relevant scholarship and grant opportunities. A great jumping off point is to use scholarship search engines and spend a good amount of time browsing them and self-educating.

Also be sure to define your scholarship niche. In what areas do you thrive? Are you an athlete or an artist? There’s likely something about you that makes you particularly qualified to receive money for school. Having conversations about this and brainstorming a list with a loved one can be crucially helpful.

Once you’ve found a good amount of potential scholarships to go after, delegate time to write essays and letters for these scholarships. It’s not easy, and it takes time to apply for scholarships, but in the long run it can literally save you thousands of dollars in tuition and living expenses.

Also remember that you can keep applying for scholarships regularly. While school work should obviously be a focus during the majority of your year, a smart use of breaks and downtime involves routinely searching for new scholarships and grant opportunities.

Have an Emergency Credit Card, Use it For Just That

There are a plethora of student credit cards out there designed for those with little or no credit. It’s possible for most students to qualify for credit cards but this should be approached with caution.

Sometimes it’s necessary to have a line of credit for emergencies and unavoidable situations. This is where credit cards can be incredibly useful. However, using credit cards for day to day expenses or other non-emergency purposes can add to debt significantly.

Avoid this at all costs, because you’re likely already going into debt just by attending college. You don’t want to create a student debt snowball effect!

Vacation Wisely or Not At All

Thanksgiving, Christmas, Spring, and Summer breaks all have something in common: they are times of year where students decompress and crave vacations in order to break away from thoughts about school work and rigid schedules.

While taking vacations can be beneficial to mental health and may eliminate stress and burnout, this should be approached with a great deal of care.

It’s easy to go overboard when taking trips, because let’s face it: school is draining. Taking time away to relax helps boost student morale. But keeping trips modest may be the best decision students on a limited budget can make–there’s no reason to completely drain your savings!

Keep vacations practical. That could mean simply returning home for extended breaks or visiting family where you know you won’t have to pay for lodging and in many cases food (most of us have relatives with the ‘feeder’ mentality).

Practical vacationing can also mean saving for an extended time and picking the best time of year to buy a airfare at discounted rates. There are typically great deals on airfare around Black Friday and the weeks before and after.

Also keep in mind that the US dollar goes further when traveling to certain countries. Consider going to a place where you can stretch your funds, and use a currency converter to plan ahead and see what the exchange rates look like.

Seek Help For Financial Planning

Remember that there’s no shame in asking for help! Whether that’s from an advisor, a close family member or friend, or a third party designed to help students make wise financial choices, planning ahead and seeking assistance is a wise decision.

The frugal tips and student loan advice above should be seen as starting points. Stay organized by creating lists, guidelines, and goals for yourself. Use the resources you have right in front of you and those that are all across the internet.

While you are ultimately responsible for your fiscal success, there’s a wide range of helpful assets and likely a lot of knowledge people surrounding you.

Robert Parmer is a freelance web writer and student of Boise State University. Outside of writing whenever he has spare time, Robert enjoys creating and recording music, caring for his pet cat, and commuting by bicycle whenever possible. Follow him on Twitter @robparmer