Do you wish you had a time machine so you could go back and make different decisions about your student loans?
If so, you’re definitely not alone. The fact is, student loan regrets are very common. Mostly because borrowers often don’t understand the long-term consequences of their student loan choices.
Seven borrowers recently shared their student loan regrets with us, and what they wish they’d done differently if they could turn the clock back. Here’s how these borrowers are managing student loans today and what you can do to avoid their student loan mistakes.
6 borrowers share their biggest student loan regrets
1. I deferred payments for years
Tasha Mayberry-Mullyakaev, the founder of web design, PR, and marketing company Social Media 22, couldn’t afford to pay her student loans after graduating. She thought that deferring would save her credit score, but really it caused her $40,000 student loan debt to balloon to over $70,000.
Mayberry-Mullyakaev learned the hard way that ignoring student loan payments meant her debt would just keep increasing. Due to compound interest, unpaid student loan debt will only continue to grow.
Therefore, if you can’t afford your federal student loan monthly payments, consider an income-based repayment plan. You can also punch in your loan info into our Student Loan Income-Based Repayment (IBR) Calculator to see if this is a viable option for you.
As Mayberry-Mullyakaev says, “Know how much you are borrowing and what payments will be.” Essentially, you’re better off doing the math sooner rather than later so you have a manageable plan for paying student loans.
2. I didn’t refinance my loans when I could
“My biggest regret is not refinancing my student loans,” says Zina Kumok, a freelance writer who specializes in personal finance. If she had refinanced, Kumok says, she could have saved hundreds.
Her advice? “I tell everyone who’s paying high-interest rates to consider refinancing, unless they’re trying to have their loans forgiven,” Kumok explains.
Refinancing your student loans can lower your interest rates and reduce your monthly payments. And private lenders allow you to refinance both federal and private loans.
What’s more, refinancing can often save you thousands of dollars over the life of your loans.
Despite her student loan mistakes, Kumok was able to bounce back. She managed to pay off $28,000 in student loans in just three years.
3. I spent my loan money on shopping sprees
Student loans are not free money, a fact that some students learn the hard way.
For instance, Stephanie Caudle ended up spending her loan money on shopping sprees. Says Caudle, “I had no idea that the same check I anticipated would be a check I would someday have to pay back.”
If she could do it differently, she would have “started saving money to pay back my student loan debt before I even graduated from college.” Today, Caudle is a freelance writer and founder of Black Girl Group, a micro-job platform that connects African American women with freelance opportunities.
Chantel Blake also regrets spending her loan money on frivolous expenses. She took out the maximum amount available and spent the remainder on a trip to Europe. Now, Blake runs Breaking Up With Debt, where she works as a personal finance coach helping others avoid her same student loan mistakes.
Caudle and Blake are not alone in spending student loan money on personal activities. A recent Student Loan Hero survey showed that the class of 2017 was twice as likely as the class of 2016 to spend loan money on non-educational expenses. In the end, all that pizza and beer had a much higher price tag than students realized.
4. I had no idea how much I was taking out
Like many students, Phil Risher, founder of the Young Adult Survival Guide, took out student loans without a second thought.
“My biggest student loan regret is not knowing the amount of loans I was taking out each semester,” Risher says. When he was faced with paying them back, he got a big wake up call.
Risher wishes he’d reached out to his college financial aid office sooner to discuss repayment plans. He advises anyone taking out loans to come up with “a proactive approach to taking on debt.” Wherever you are in life, it’s not too late to track your debt and come up with a plan to conquer it.
5. I paid for a degree I don’t use
Blake is also a student loan borrower who wishes she’d done a cost-benefit analysis before getting her Master’s degrees, especially because she ended up with over $75,000 in student loans. Yet, three years later, she’s still not working in the industry in which she got her graduate degree.
Before taking on student loans to finance an expensive degree, consider the return on investment. A graduate degree should advance your career and lead to a higher salary. Therefore, consider whether the benefits of a degree will outweigh its costs.
6. I used my loans to go to an expensive college
Nikki Koontz didn’t hesitate to take out loans for her four-year college and a year-long study abroad experience in London.
However, Koontz says she “had no idea how much anything cost or any concept of compounding interest.” The result, unfortunately, was “off-the-charts ridiculous” student loan debt.
“I will be paying off my loans with a very high monthly payment for the rest of my life,” says Koontz. “It’s a huge burden that I wouldn’t wish on anyone.”
As the Assistant Director of Marketing at Southern Utah University, Koontz now helps students avoid her student loan mistakes. While she’s a strong proponent of higher education, she encourages students to speak with financial aid advisors before taking out loans.
“Get all the facts up front,” says Koontz. “Try to find scholarships or work study opportunities. There is a lot of unclaimed money, but you have to be willing to work for it.”
Recovering from student loan mistakes
Most borrowers make mistakes with their student loans out of a lack of financial literacy. They often take out loans without understanding the long-term consequences of student loan debt.
Just as importantly, consider the return on investment of your degree. Remember, you won’t be able to pay back student loans without an income.
And if you’re dealing with the fallout of student loan mistakes, you definitely have options for managing student loans and getting your finances back on track.
Student loans are a huge burden. But by sharing both our mistakes and successes, we can work together to resolve the current student loan debt crisis in America.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.06% – 13.06%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.25% – 11.10%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|5.62% – 10.01%7||Undergraduate and Graduate|
|3.93% – 9.81%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|