It doesn’t seem like anyone would make a significant financial decision without fully understanding the terms and total amount of debt involved, but plenty of college students do this. A recent report run by Elizabeth J. Akers and Matthew M. Chingos of the Brown Center on Education Policy at Brookings, found that many college students don’t know how much debt they have, and some didn’t know they had a student loan at all.
Only 52% of the respondents in the study were able to report an accurate range of how much student loan debt they’d have after graduating. 25% underestimated, 17% overestimated and 7% did not know.
Mistakes with Student Loans
Many students are unaware of the financial aid they qualify for. This has led nearly 75% of high school students to think they can’t afford higher education. While schools have made this knowledge easier to find with helpful calculators on their website, that doesn’t begin to cover the other mistakes students make. Here are some of them:
Accepting the amount of their student loan without actually comparing it to the cost
Not calculating future monthly payments
Not keeping track of debt through college
Some companies offer the opportunity to consolidate or refinance student loans. Students must tread carefully with any offers they receive that promise debt relief that drastically reduce payments.
Other consolidation companies profit from simply offering counseling services that can easily be found for free elsewhere.
Scams to Watch Out For
If any company insists on receiving a fee prior to negotiating or settling your student loan debt, you should walk the other way. Remember that there should be no application fee for consolidating.
Graduate students should also be wary of offers to consolidate graduate loans. Graduate students are often hit with “too good to be true” offers that are tempting.There are reputable places that consolidate or refinance graduate and student loans, and they are usually your local financial institution.
Keep Your Money Safe!
Your best bet is to head to your local credit union for help with student loans.
Aspire FCU has helped many students consolidate their student loans so they have a more manageable monthly payment.