If you are planning on attending college, chances are you will need some amount of student loans to help fund your education. Since the average college student will have to take out student loans, let’s go over some common mistakes you will want to avoid when considering student loans for college.
1. Applying for student loans before seeking out scholarships and grants you may be eligible for.
If you can get money for college that will not have to be repaid, why not do it? Take a look at all of your scholarship, grant and loan alternative opportunities before considering student loans.
2. Applying for private student loans before applying for FAFSA.
Private student loans are not regulated the same way federal student loans are, and therefore will typically have higher rates, less flexible terms, and not nearly as many repayment options as federal student loans. When college graduates speak of being in student loan debt with virtually “no way out”, many of them are speaking of private student loan debt. Those with private student loan debt are not eligible for ANY federal student loan relief programs or federal student loan consolidation programs. Max out your federal financial aid before ever considering a private student loan.
3. Not filing a FAFSA at all.
A very large misconception is that students think “they will not qualify for federal financial aid”, when in reality the majority of students do qualify for some type of federal financial aid. Not filing a FAFSA is arguably the worst mistake you can make when it comes to student loans.
4. Having Poor or Little Credit and applying for private student loans without the help of a cosigner.
Applying for private students loans can be a waste of time if you are not a creditworthy borrower. Private student loans are based on credit history, so if you do not have much credit history, or have poor credit history, the majority of private student loan lenders will require a creditworthy cosigner on your loan.
5. Borrowing more money in private student loans then you actually need.
This can be tempting for many college students, since private student loans are not based on need, many have the opportunity to borrow in excess of what their educational expenses actually are… BIG MISTAKE! Remember all the money you borrow in private student loans will have to be paid back with interest. This mistake contributes to how many college graduates find themselves in unmanageable student loan debt.