Why are students getting into student loans?

by Louise Clayton

Student mistakes in business and what you can do differently. The big student loan debate is perhaps one of the most contentious in the country. While most students agree that borrowing money through student loans is the only way they can afford to pay for college, many find it quite a burden to repay those loans upon graduation.

Although New York State is testing its unique solutions for free tuition at public 2-year and 4-year colleges in exchange for academic progress and post-graduate residency, students in other states must deal with the current lending situation.

New guidelines for student lending and repayment


Unless the Department of Education comes up with new guidelines for student lending and repayment, here are some student loan mistakes that can get students and cities in trouble, and some recommendations for what you can do differently:

Error: Assuming you have to accept the student loan offer as outlined in your school’s financial aid package.

Solution: Stop assuming and understanding exactly what you are investing in in the future. Understand your financial aid offers, carefully compare colleges, and do not borrow what is stated in your letter.

You and your parents will commit to 10 to 30 years of repayment, so use the federal student loan repayment estimate to find out exactly what that entails. If you can find money through other sources, do it first, then borrow less than what is offered.

Mistake: Looking at student loan money as a kind of “refrigerator” to use at a random college expense.

Solution: After making the first mistake and over-borrowing, students then reduce this mistake by recklessly spending the money they receive. While it is a good investment to use these funds on tuition, room and water, and appropriate college-related expenses, many opt for a poor investment and use them for daily living and entertainment expenses.

They don’t realize that interest in all that money is being raised and that the seemingly innocent $ 100 spent on a night of fun now ends up costing hundreds of dollars in the future. Make a tight budget, stick to it and find other ways to get money for those various expenses out of your pocket.

Mistake: Keep your head in the student loan after graduation.


Solution: After four to six years, or more, of a carefree life, students finally graduate and continue to seek life’s rewards. They may take the gifts they received and buy a nice car or enjoy a vacation before you really fit into the business of finding a job.

After about six months they get a rude awakening when payment notices start to come in and have no payment plan. One of the first tasks after graduation is to handle student loan debt.

Find out exactly how much money you have borrowed, who your loan services are, and what your monthly payments will be. Save some of that cash while looking for a job after college. Once you have projected your income and living expenses, compare them with the amount you owe.

Eventual loan consolidation

If you have more money than you have come, contact your lending officers immediately to discuss alternative repayment plans or eventual loan consolidation.

It’s too late to wait for the bills to start appearing, as your debt will continue to rise, along with late fees and additional interest, as you try to come up with a payment solution.

The biggest mistake is waiting too long for any post-graduation action. Young adults in their first months of handling their own financial situation may not realize how quickly they become a deep financial hole.

They are missing payments or two, realizing that it is no big deal and they are not taking any action to resolve the situation. Then things really start to get out of hand and end up facing a situation where they are owed more money than they can realistically expect to pay off. Student loans are great support, but think before you borrow.