Avoid these common mistakes when it comes to your student loans.

February 28, 2024

Avoid these common mistakes when it comes to your student loans.

The process of applying for and paying off student loans can be a stressful experience, and it’s common for students to make mistakes as they make their way into adulthood.

There are a few common mistakes to avoid if you’re trying to make financial life simpler for yourself in the near future.

Here are a few actions you can take to be repaid in the long term to avoid being burdened with student loan debt for longer than is necessary.

Do your homework on interest rates.

Don’t take the first loan offer you receive. Although it might be tempting to pay it off and be done with it, failing to conduct your research could result in paying more interest than you need to.

Do some research about the various rates of interest and offers offered by both government-funded student loans and banks to ensure you’re getting the best price.

You can pay off more than the minimum balance.

Melissa Lockert wrote on Business Insider in the middle of this month about how she paid off $81,000 in student loans over nine years.

She wrote that one mistake she made that she wished she hadn’t was paying off only the minimum balance on her student loans.

The woman advised, “For the first five years of student loan repayment, I made the minimum payment. I treated it as an expense and did not let it bother me. Could I have gotten more? Yes. In the end, it was when I took on more debt that was due to New York University – graduating with a debt of $68,000 that I began paying higher than the minimum.

“I struggled to pay for my tuition after graduating and I wish I had been able to advance when I could have had the money for it. If you can, make sure to pay more than minimum.”

When you begin your first job, put aside a budget and figure out the amount you will be able to afford to pay for student loans. It’s possible to cut back on certain luxury items. However, you’ll repay your student loan quickly.

Not making lump-sum payments.

If the loan you are taking out does not have any penalty for early repayment, which they usually don’t, this means you can pay off your student loans at any time without additional costs.

Zack Friedman, Senior Contributor to Personal Finance at Forbes and the top-selling author of The Lemonade Lifeadvised students that if they have extra money like a pay rise or tax refund, bonus, or monetary gifts from a grandparent or parent, make use of it to pay off your student loan in one lump-sum payment.

refinancing student loans

This might sound like a great option to save you money, but this isn’t always the situation. According to Cappex, “Refinancing student loans with an extended repayment term could reduce the monthly installment, but it could cost you money in the long run.

“Refinancing can also increase the interest rate. If you’re in the process of repaying multiple student loans, you could save money by focusing on the loans with the highest rates for faster repayment instead of refinancing the loans.

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