Unless you were born with a silver spoon in your mouth and you are one of the lucky few that will have college paid for them, you are probably going to have to take out student loans. Taking out student loans is very common and unfortunately so are many mistakes that college students make when taking out these loans. If you want to be smart when taking out student loans for college, here are 4 mistakes to avoid when you taking out your loans.
Taking Out More On Loans Than You Actually Have To
One of the biggest mistakes college students make when taking out loans is taking out too much. As a poor college student, it can be tempting to take out a larger amount of loans to help pay for a new computer, books, or even basic necessities like groceries. Just remember that every penny you take out on student loans has to be repaid eventually with interest. Before taking out a student loan make sure to do the math and only take out student loans to help pay for tuition and books.
Deferring Student Loans
Deferment is probably the costliest mistake college students make on their student loans. Deferment is a nice option if you have a difficult time finding employment after school or have some unforeseen circumstance that can financially drain you. However, many students choose to defer their loans because they can, not realizing that their student loans are adding up with interest. If you can afford to make even just the minimum payment on your student loans once you are out of college, do it.
Not Setting Up Automatic Payments
It can be easy to miss a student loan payment with how busy life can be. Setting up automatic bill payments for your student loans is a smart move because it will not only ensure that your payment will be made but also that paying on time will help your credit score which will be important in the future when you purchase a vehicle or buy a home.
Not Taking The Time To Assess Refinancing Options
When you are in school you are just thinking about the next test that you have to pass and not thinking about the years of student loan payments that are in front of you. Look at the interest rate that you have on your loans and determine if consolidating or refinancing that student loan debt makes sense for your financial future.
College is an exciting time but also a crucial one in creating the building blocks for your future. When taking out student loans, make sure that you make smart decisions and avoid these mistakes.