Major Student Loan Mistakes, and Ways to Avoid Making Them

Major Student Loan Mistakes, and Ways to Avoid Making Them

Major Student Loan Mistakes, and Ways to Avoid Making Them

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The economy’s long nosedive has done more than raise unemployment rates and housing foreclosures—it’s also contributed to a devastating increase in the amount of student debt. Following a recent Education Department report on debt repayment figures, Gawker compiled a list of the top ten universities for student debt, which is topped by NYU’s staggering $659 million total.

This year also marked the first time in history that outstanding student loan debt exceeded outstanding total credit card debt, with student loan debt nationwide increasing at a rate of about $2853.88 per second. It’s a grim landscape for students who’ve borrowed money, and one that is rife with ways to exacerbate the amount owed. In light of this, Sarah Deveau has provided a helpful list of tips and practices to avoid via the San Francisco Chronicle.

Highlights from the pieces, "The 6 Worst Student Loan Mistakes You Can Make" include smart warnings against tempting practices like falsifying information on a student loan application, spending loan money on non-essential purchases and missing payments. "Some experts suggest that your monthly student loan payment should be no more than 10% of your expected salary," Deveau writes. "Calculate your monthly loan payments based on a 10-year repayment schedule, including interest, the find out the average starting salary for your career choice. If your loan payments will be higher than 10%, look at reducing the amount you borrow, either through producing more income or switching to a less expensive program."

The bottom line, she says, is this: 

A student loan is often the first large sum of money a young adult must manage themselves. Avoiding common money mistakes when it comes to financing your college education is crucial to graduating with only good debt, and as little of it as possible.

Some of it seems fairly no-brainer, but Deveau lays it out in concrete, practical terms that should make a lot of sense—especially to students taking on loans for the first time.

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