10 Things Every College Student Should Know About Student Loans

Michael Lux Blog, Consolidation, Lower Payments, Student Loans 0 Comments

1) For many borrowers, the amount of student loan debt they have is enough to buy a house.  Think about the time, effort, and research you would put into buying a house.  You should put the same or similar effort into understanding student loans because the stakes are similar.

2) Your loan servicer is not a financial advisor.  If Sallie Mae tries to talk you out of consolidation, it doesn’t mean that it is a bad idea for you.  Sallie Mae gets paid to service your loans, if you consolidate and the loans go elsewhere they no longer make money.  It is in their interest to talk you out of consolidating your federal loans.

3) Whether you are entering college, in school, or a grad; in order to plan smart, you have to know the difference between federal government loans and private loans.

4) NEVER ignore your student loan problems.  These issues will not go away.  If you think your situation looks bleak now, ignore it for a few months or years and you will learn a whole new definition of bleak.

5) Its critical to understand how interest grows and compounds.  Paying the minimum or none at all doesn’t mean you just pay later, it means you will be paying MORE later.

6) Everyone’s loan situation is different.  Beware of advice that says one repayment plan is the best or that you should always or never do something.  Learn your options and pick what works best for you.

7) Have a Plan B.  You may want to do public service loan forgiveness, but what happens if your dream job comes along and it doesn’t qualify?

8) Know what makes student loans different from all other forms of debt.  Bankruptcy may get rid of credit cards, a bad mortgage or even a court judgment against you; but your student loans will stay with you.

9) Know the difference between what you want and what you need.  You need to pay off your student loan debt, but you want to buy that new car.  Use sites like mint.com and studentloanhero.com to help you budget accordingly.

10) Your lenders are in business to make money.  If you talk to the right person and show them that they will make the most money if they help you out, you can get your interest rates lowered.

Final Tip: Paying off your student loans is a marathon, not a sprint.  Don’t let the stress get the best of you.  It will only make your situation worse.