Not many people want to bring debt into their lives. Unfortunately, getting a loan is sometimes the only way to solve certain problems. Paying for college is one such problem. And you solve it by getting a student loan. In spite of their names, student loans are very serious loans and they currently burden a lot of Americans. That’s why it’s so important to use them wisely and not throw them away on vacations or other useless stuff. So, in order to help you avoid getting into trouble, we’ve put together a list of the biggest student loan mistakes Americans make nowadays.
1. Missing payments
This is one of the biggest mistakes you can make no matter what type of loan you have. If you believe that it’s no problem if you miss a payment and that you can just pay double next month, you’re very wrong. Every missed payment will affect your credit report, bringing your score down. This will in turn make life harder for you in the future, when you’ll be interested in getting a mortgage or new credit cards.
2. Defaulting on the loan
Another big mistake, which probably doesn’t even need to be mentioned, is defaulting on your loan. This will absolutely destroy your financial life. Since the federal government is the loan guarantor on most student loans, it can keep your income tax refund or garnish your wages to pay back the loan, plus any collection costs. You won’t be able to escape this mess, no matter how hard you try.
3. Spending the loan money on things you don’t need
Many people, although they may not want to admit it, are financially irresponsible. Such people usually throw money away on drinks, clothes, furniture, parties, vacations or other things that they don’t really need. They might make you feel good for the moment, but you’ll end up regretting this decision sooner or later.
4. Spending everything
You could receive a larger loan amount than you actually need. Try not to spend everything all at once. The smart thing to do is to save the money. Rainy days may come and you may need it.
5. Lying on your student loan application
Avoid doing this at all costs. You don’t need to impress anyone and, if you get caught, you will not only lose your loan and incur fines, but you may be charged with fraud and be sentenced to prison.
6. Taking on too much debt
Don’t count on landing a high-paying job after you graduate. Often, things don’t go as planned. It’s a lot better to be safe rather than sorry. So think about reducing the amount that you borrowed instead of increasing it.
Numerous Americans are having a difficult time dealing with student loans. If you want to stay safe, you need to avoid these student loan mistakes, and be smart and act responsibly even before you sign the papers for your student loan.