Avoid These Top 4 Student Loan Mistakes in Your 20s


Your 20s are a time of education, growth, fun, and change. I’m 28 now, and it’s hard to believe that in the last 8 years, I’ve graduated from college, finished graduate school, gotten married, started a business, and had two children.

That’s a lot for one short period of time, and when I put it like that, it sounds as though the last 8 years have been pretty successful. What you don’t know, though, is that I made some big mistakes.

I made several big student loan mistakes. I borrowed way too much, around $39,000 actually, and now—at 28—I’m trying hard to pay it all back. The reason I consider this too much money is because my degrees are in history, a traditionally low-paying field.

My first job out of graduate school paid $25,000 a year, and on such a low salary, the $300/month payments were difficult. I’m not alone.

A 2012 New York Times article showed that 66% of students took out federal or private loans for college, and the number is only growing.

So, if you’re one of the many people in your 20s taking out student loans, make sure that you’re avoiding the following four big student loan mistakes so you can enjoy your 20s and not be burdened by too much debt when you graduate.

1. Being Unaware of Your Loan Balance

When I graduated from college, I decided to finally sit down and figure out how many student loans I had.

At first, I didn’t even know how to find out. Did I call my school? Did I just check my credit report? I honestly had no idea where to start. After a few calls to financial aid, I got all the information I needed from the Federal Student Aid database.

Then, I learned I had taken out $14,000 in undergraduate loans. Somehow, the $1,000 here and $2,000 there throughout my college didn’t seem like $14,000, but it added up.

I ended up going to graduate school before I had to make a payment, but I had no idea that that $14,000 would turn into a payment of around $100 or more depending on my repayment plan after I graduated.

Don’t make this mistake. Even if you’re nervous about it or know the number is large when you graduate, sit down and calculate your debt anyway. It’s the first step you need to take to begin to pay it off.

2. Ignoring Student Loan Payments

When you graduate from college, you will eventually start to get bills for your student loans. Many students get these bills and don’t pay attention to due dates. Many more see those high figures and get scared they won’t be able to pay it, so they ignore their student loans thinking they’ll just go away. Please don’t do this.

Remember, there are many different repayment options when it comes to federal student loans, including income-driven plans. So if the number on your bill is larger than what you can afford, call your loan servicer. Work with them to find a way to lower your payments until you can increase your income.

I know it’s a difficult call to make, but it’s better than ignoring it. The last thing you want is for your student loans to go into default because you haven’t paid them. This can have serious repercussions, including wage garnishment. It can also ruin your credit, and that, in turn, can have negative effects in the future when you want to buy a car or a house.

3. Choosing the Wrong Repayment Plan

There are so many different types of repayment plans available to graduates that I didn’t even know existed. In fact, choosing the wrong repayment plan is one of the biggest student loan mistakes graduates make.

If I had known about this strategy, I might have enrolled in a graduated repayment plan to give myself time until my income increased. After all, it’s much better to have a payment you can afford instead of going into default.

You also want to see if your job qualifies for certain types of loan forgiveness such as Public Service Loan Forgiveness and Teacher Loan Forgiveness. There are even loan forgiveness options for people who go on to professional schools like medical school and law school.

Don’t assume that you will have to pay high student loan payments every month for years on end. Instead, take the time to do the research and find out how you can reduce your student loan payments if you’re struggling, or spend some time getting your finances in order so that you can pay off those pesky student loans quickly.

4. Using Your Student Loans for Spring Break

My husband jokingly called us “fake rich” when our student loans came through—it sure felt that way when several thousand dollars got deposited in our account in one day. Having a large lump sum in your account is not a problem when you know how much you’re going to have to allocate to books, housing, and other academic expenses.

It is a problem, though, when you use your student loan balance for things that aren’t exactly school related—like spring break, nice clothes, or big nights out on the town.

The truth is many students use their student loans as spending money, and that’s definitely a mistake. You don’t want to buy clothes or pay for outings that aren’t school related with your loans because you’ll be paying for those things for years after you graduate.

Instead, try to work a side job in college and use that money to pay for life’s little and not-so-little extras. Then, keep your student loan balance as low as possible and only pay for necessary expenses.

Have you made any student loan mistakes yourself?

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