Avoid These Student Loan Mistakes When You Live Off Campus
Living off campus may seem ideal for students. You have more space, there is no awkward AR around, and guests can come and go as they please. In many cases, it’s also more affordable. At Millersville University, for example, living on campus costs almost $ 48,000 over four years of schooling. Paying for off-campus housing? It would be less than $ 20,000.
But those savings shouldn’t mean lowering your financial guard when paying for tuition and other associated fees. To really maximize what off-campus life can do for your wallet, you need to be smart about how you manage your money and, more importantly, your student loans.
Don’t worry about having to go through student loan options yourself. Credible can help you compare student loan companies (and hopefully get you the lowest rates for what you’re looking for).
3 student loan mistakes to avoid
Want to make sure your off-campus life is as successful as possible? So avoid these all too common mistakes:
- Do not complete your FAFSA
- Relying on student loans for expenses
- Borrow the wrong amount in school loans
1. Do not complete your FAFSA
You should always complete the Free Federal Student Aid Application, or FAFSA, before each school year.
The FAFSA allows you to apply for federal and state grants – essentially free money for your education – as well as federal student loans, which tend to have better interest rates and more favorable terms than private loans.
“Always borrow from the federal government first, because federal student loans charge lower fixed interest rates that are not dependent on your credit scores,” said Mark Kantrowitz, student loan expert and author of “How to appeal for more university financial aid â. âFederal student loans also offer better repayment terms. “
If you are not eligible for federal student loans, you should consider taking out private student loans. Credible can walk you through the application process to make sure you’re getting the best deal possible.
5 STUDENT LOAN REFINANCING MISTAKES TO AVOID
2. Rely on student loans for expenses
When you live on campus, a large portion of your costs are controlled. Your food costs are bundled with your accommodation costs, and you don’t have to worry about overspending for restaurants, electricity, water, or other running expenses.
But when you pay for off-campus housing, things change. You are responsible for the costs of food and utilities, and it’s usually easier to spend on non-essential expenses. While student loan funds can certainly help offset your additional living costs, it’s important not to live beyond your means (as that could mean borrowing additional student loans and racking up more debt).
âCreate a budget and stick to it to avoid living beyond your means and making non-essential purchases,â said Leslie Tayne, debt relief lawyer at Tayne Law Group. “The more money you borrow, the longer and harder it can be to pay off student loans.”
If you find that your costs are spiraling out of control, consider getting a part-time job, taking another job, or even tutoring to earn some extra cash. Jobs on campus can also be a great way to earn money and gain experience.
WHAT ARE THE REFINANCING RATES FOR STUDENT LOANS?
3. Borrow the wrong amount in loans
Student loans are necessary for a large number of American students. In fact, about 70% of the class of 2019 took out student loans at some point in their studies.
The CARES Act, however, continues to provide federal loan borrowers with some relief for their loan repayment with the ability to suspend payments without interest. As relief from the coronavirus pandemic, President Joe Biden extended the legislation until September 2021, which could help millions of Americans pay off their debts.
Cancellation of student loans continues to be controversial on both sides of the aisle, as the Biden administration assesses the ability to repay current student loans and ease the burden of tuition fees for students .
But while taking out student loans is common when it comes to the cost of education, it’s also something you should approach with caution. Before you borrow money, use a student loan calculator to carefully calculate the amount you need to pay off your loan. You can also calculate the numbers using Credible’s free online tools.
âStudent loan debt can be considered good debt because it’s an investment in your future, but too many good things can hurt you,â says Kantrowitz.
Ideally, you shouldn’t borrow more money for all of your education than expected for your annual starting salary, says Kantrowitz.
âIf your total student debt is less than your annual income, you should be able to pay off your student loans in 10 years or less,â he says. âOtherwise, you’ll have a hard time making your loan repayments and you’ll need an extended or income-tested repayment to pay the monthly loan payments. “
HOW TO CHOOSE THE BEST STUDENT LOAN TERMS FOR REFINANCING
The bottom line
If you are using student loans to pay for your tuition and tuition fees, be sure to exhaust your federal options first. Then move on to private loans and use an online student loan calculator to assess costs and make sure you only borrow what you need.
Finally, be sure to shop around for your lender. Student loan rates and terms can vary widely, as can personal loan or car loan rates, so use a tool like Credible to get personalized rates from multiple lenders without affecting your credit score.
5 WAYS TO GET THE BEST STUDENT LOAN REFINANCING RATES
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