Student Loan Mistakes

In June 2010, total student loan debt exceeded the total credit card debt outstanding for the first time. Total student loan debt is growing at a rate of about $ 2853.88 per second. For some students, which is about the cost of the value of books a year. For others, it is the cost of their spring break getaway to Fort Lauderdale.

If you are frugal mind, the idea of ​​using loan funds to students to pay for vacations, new dorm furniture and weekends at the campus bar is craziness. But that's just the mistakes done by the students regarding their student loans.

Here are 6 worst student loan mistakes to avoid if you take student loans.

1. Lying About Your Application

Lying on your student loan is the first misstep you can do. Get Caught (and there is a strong possibility that you will be busted, as some schools check all requests for financial assistance) and you not only lose your loan and get fines to pay, but you can be accused of fraud and sentenced to prison - where you will receive your free education, but probably not the prestigious degree that you hoped.

2. Wasting Loan Money upon Desires, Not Needs

If you are spending your loan money on the tabs of the bar in the pub on campus, either you do not understand how to make difference between needs and desires, or you do not care to make those necessary decisions. Anyway, it is termed as poor money management to use your future to pay for the temporary pleasures of today. Abandon the new Ikea furniture and a bright living room shipwrecked thrift store. Buy groceries, not to take away; budget for books, not alcohol.

The use of the loan money to pay for your education that will be with you always is good management of debt. The use of loan funds to buy the latest laptop or MP3 player that will be out dated decade before you will be finished paying for it is very bad debt.

3. Spending Every dollar You Get

If you get a higher loan amount than you actually needs , you might be desired to spend until it's all gone to nothing substance. If you earn more money than expected in your part-time work, or decrease your living expenses, you may be required to submit your student loan adjustment. If not, save the excess cash in a high interest savings account and use it to start repaying your loans when you graduate.

4. Taking too much Student Loan

You are sure that you will land a good paying job when you graduate, but if you do not do? Some experts suggest that paying your monthly student loan should not be more than 10% of your expected salary. Based on a 10-year repayment schedule calculate your monthly loan payments , including interest, then search for the average starting salary for your career choice. If your loan payments will be more than 10%, consider reducing the amount you borrow, either by producing more revenue or to move to a bit less expensive program.

5. Missing payments

Many students often bounce a payment thinking that they will pay ​​pay the double amount next month. This is a big no-no when it affects to your credit score. Each missed payment is a black mark on your credit score history, even if you have submitted that payment or not. If your repayment schedule is quite more than you can afford to pay, then you must talk to your lender to find a proper solution before you are going to start payments bounce.

6. Defaulting on your  Student Loan

If you fail to make any payment on your student loan for more than 270 days, then your student loan will be sent in default, and ultimately your financial life in free fall. Do not try to cheat your lender - they find you, and the penalties are stiff. The federal government, the guarantor of the loan on most student loans, has the ability to keep your tax refund on income or enhance your wages to repay the loan, and all recovery costs.

The Bottom Line

A student loan is usually the first large amount of money to most students so they should handle themselves. Avoid the common mistakes when it regards financing your college education as it is crucial to graduate with only good debt which must be as little as possible.