Students Warned To Avoid Common Student Loan Mistakes

Frequent student loan errors can cost borrowers a great deal

Shaun Plum
MoneyTips Contributor

Borrowing Student Loans

Students Warned To Avoid Common Student Loan Mistakes
April 6, 2016

College students who have taken out student loans to finance some or all of their education are urged to learn how their particular loans work and to educate themselves about the student loan process and financial aid options that are available. Today, about 70 percent of all students who have taken out loans have an average debt of almost $30,000. This is according to a survey conducted by LendEDU, the student loan marketplace, which shows that almost half (42.5 percent) of all students do not understand that their student loan debt affects their credit score and can disqualify them for other types of loans.

Many students also make fairly common mistakes that lead to their student loan debt increasing. One of the biggest is failing to fill out the Free Application for Federal Student Aid (FAFSA). This application is what qualifies students for the free need-based financial aid provided by the federal government. More than $150 billion dollars is allocated for FAFSA recipients every year, with those filing early typically receiving larger grants.

Another mistake made by many is failing to pay the interest on their student loans. Some private and unsubsidized federal loans do begin to accumulate interest immediately, even if the student is still enrolled in school. This interest, if unpaid, is added on to the loan, increasing the overall balance and leading to even more interest being added. This compound interest can quickly increase the amount the student owes.

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Brittany | 04.06.16 @ 17:01
As a full time student, this is ridiculously useful.
Erin | 04.06.16 @ 17:01
I will be reminding my kids of this as they head off to college with loans. It's such a big responsibility when you first get out of school and so very important to stay on top of. Thanks for the reminders.
STOKES | 04.06.16 @ 17:02
I've never really regretted not finishing college. The older I get, the worse it seems to get in the job market and having a degree doesn't seem to help.
trish | 04.06.16 @ 17:02
Wonderful information to pass along to my neighbor's who's daughter has just been accepted to four colleges. Deciding where to send due to finances. Not sure they are aware of the FASFA option at all!
Carla | 04.06.16 @ 17:02
That is an expensive oversight. I would think they should be told this before applying for a loan. I'm sad that the cost of education is going up so high.
Steffanie | 04.06.16 @ 17:03
Quite a timely article for this family. We have a child entering college. Thank you.
irene | 04.06.16 @ 17:04
Great info, that interest can really pile up if you aren't careful
Sarah | 04.06.16 @ 17:04
Student loans are so hard to handle... it's nice to have info making it easier to navigate
Jonathan | 04.06.16 @ 17:04
I'd advise Community College 1st, to save that money!
Bobbie | 04.06.16 @ 17:04
Telling my daughter this as she starts college this fall. Work, live at home, scrimp and save to avoid any debt. Already have her FAFSA filled out and just running documents to the college as needed for approval.
Heather | 04.06.16 @ 17:05
This day and age you have to have a college degree to get any good job but it can be a trap with student loans. More students need to educate themselves before signing for any loan.
$commenter.renderDisplayableName() | 12.03.20 @ 16:54