Almost every student faces this question of how to arrange money for their college studies. The easiest option they see it to take a student loan to finance their way through their college days. Thus, they start their journey towards a debt trap where they enjoy their college days by spending the student loan money they have taken and spend their rest of life paying back the student loans. To avoid getting into a student debt trap, there is student loan mistakes one should avoid and its necessary you take minimum student loan possible and complete your graduation in time so that you can start earning quickly and payback starts early.
The five biggest student loan mistakes which led to a debt trap
- Borrowing more than what you need:Students largely borrow what the maximum loan eligibility amount they can rather than borrowing only the amount they need. They generally do that to live on during college. One should borrow only enough to cover your tuition, room and board and books. Skip the beer money and shopping trips. As the saying goes, live like a student in college, so you don’t have to later.
- Not completing graduation in time:Majority of students don’t complete their graduation in time i.e. 59% of students take six years to graduate while only 39% of college students in the USA graduate in four years. It results in adding another two years of debt on the borrowing as well as losing two years of earnings on top of it, which is a loss making proposition overall
- Borrowing more than future earnings from job:Students borrow more than what they would earn after graduating from the college. The rule of thumb is one can only afford to borrow as much as one can expect to earn from first year working in your field. For engineers, of course, that’s usually a much bigger number than for music or art majors. Check out the National Association of Colleges and Employers salary survey for guidance on the average starting salary for a degree.
- Avoiding public in-state colleges:State schools are often the best value because they offer a discount to residents. Check them out first before looking further. Also, key issues in adopting for out of state college can be checked by clicking on the link
- Missing student loan payments.Once you are in default, it is next to impossible to discharge the loans in bankruptcy. You are considered technically in default if you don’t pay federal student loans for six to nine months, depending on the type of loan. Also, lack of knowledge on parts of students result in missing payments or late payments which make them non-eligible to qualifying for a federal program that offers loan forgiveness.
I hope above information on Student Loan Mistakes One Should Avoid helps you in avoiding falling into student loan debt trap and so that you can live a life without worrying about student loan debt.