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Written by: Livia Neistat
It makes financial sense to invest in a decent education. On average, college graduates earn more than those with merely a high school education. They are also less likely to be unemployed. These are excellent reasons to attend college, but paying for it with own funds might be tough. Many students rely on loans to make ends meet, putting themselves at danger of making major financial blunders.
"It is crucial to make sure that you are cautious when incurring any form of debt, and to always understand or review the terms of that loan upfront," Jayson Matlock, a financial aid counselor at Southern Utah University, recommended. Debt, on the other hand, should not be feared because it may assist you in overcoming many challenges in life. All you have to do now is make sure you're financially capable of paying off your debt while keeping a good standard of living."
SUU, a fellow Education of Distinction, has put up a list of major blunders to avoid when it comes to paying for college.
Ignoring the availability of free money
Taking out a loan has a cost associated with it. The money must not only be repaid, but it must also include interest, which increases the total cost. Grants and scholarships are non-repayable kinds of financial aid, making them excellent options for helping students pay for education. Active service and honorably discharged military personnel can benefit from military benefits. Employees may be eligible for tuition help or reimbursement from their employers.
Excessive Spending
While many students manage their student loans properly, there is always the temptation to spend money on things that aren't necessary. Avoid taking trips and vacations with your loan money, as well as occasional shopping sprees. These sorts of hasty decisions can cost you a lot of money, but they can simply be avoided with a little self-control.
Taking out a larger loan than necessary
Loans can assist bridge the gap between your financial resources and the expense of your education, but you should only take on as much debt as you need. To cover your day-to-day expenditures, seek part-time employment. The concept is straightforward: the less money you borrow now, the less money and interest you will have to repay later. It's also crucial to plan ahead and figure out what the typical wage in your chosen sector is in order to estimate how much you'll be able to afford in monthly loan payments.
Uncertainty about your repayment options
Benjamin Franklin once said, "What you can achieve now, you don't have to put off to tomorrow." This is true for student loan refinance as well. You can save time and money if you understand the intricacies of repayment. Inquire about repayment choices with your loan servicer to see which plan is best for you. Depending on your circumstances, you have a variety of alternatives, including income-based repayment arrangements. To prevent defaulting on your loan and damaging your credit, it's critical to keep in touch with your loan servicer.
For Fixed Rates, Variable Interest Rates Can Be Confusing
While this is required for all loans, not all interest is created equal. The two forms of debt levels are fixed and variable interest rates. A fixed-rate is one that does not change during the period of the loan. A variable rate is one that fluctuates throughout the course of a new loan life. Whereas lending rates may appear to be less expensive at first than fixed rates, they can soon escalate, requiring you to spend much more. Try to ask your mortgage servicer about how interest capitalizes over time.
First, get a loan from a private lender.
Always pick federal student loans first when borrowing money for education. These loans have more favorable repayment conditions, are more readily available, and are less costly than private loans. These loans have set interest rates and do not need a credit check. Private loans should only be considered if you are no longer qualified for government loans or if your federal loan maximum has been surpassed.
Failing To Consult With A Financial Aid Counselor
Financial aid counselors are a valuable resource that can assist you in making the best decisions possible when it comes to paying for college. They have years of knowledge and can answer any concerns you may have, as well as assist you in applying for scholarships and grants and determining the best financing for you. Once you've decided on an institution, make sure to inquire about the financial assistance options available. If you schedule an interview with a financial aid expert, you may discover wonderful opportunities that will make paying for college much easier!
It is costly to attend college. This is something we understand. That is why Colleges of Distinction is dedicated to providing you with one-of-a-kind funding alternatives.
Related: When it's a Good Idea to Refinance Your Student Loans (and When It Isn't)