6 Common Student Loan Myths

By Victoria Robertson on July 15, 2017

Student loans, unfortunately, are a necessity for many undergraduate and graduate students alike. Think of them as a necessary evil, providing us the education that we need but with the expectation that we will repay those debts, with interest.

However, even with so many individuals utilizing student loans, there’s a lot of misunderstanding and confusion surrounding them. In fact, many individuals don’t know the basic, important details about their loans until it comes time to pay them, at which point, it’s too late.

So, to put some of the confusion to rest, here are six common student loan myths that you shouldn’t buy into.

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1. You can always defer

Unfortunately, this is not the case. When it comes to repaying your loan, there are very few ways in which you can defer. One of which is if you return to school. However, there are stipulations as well, such as the requirement that you be a full-time student and there’s a limit length as well (which may vary depending on the type of loan that you have).

You can also qualify for deferment based on your financial situation, such as if you lost your job and need to defer for a couple of months. Again, there are limit lengths on this and the qualifications vary from loan to loan.

So don’t just assume you’ll be able to defer your loan, as there’s a good possibility that you won’t be able to.

2. You don’t have to make monthly payments while you’re still in school

While this one is technically true, you still want to get it out of your mind. At the very least, you should be making small, monthly payments to combat the growing interest that you’re accruing while you’re in school. While, again, it’s not a necessity, it’s going to save you a ton of money in the long run.

3. All loans are the same

Nope. Not at all. First of all, there are federal versus private loans, and that’s a debate that will be ongoing for a long time. For many, federal loans aren’t an option, and for others, it’s the opposite. Essentially, what it comes down to is what’s best for you and your personal, financial situation.

The best way to determine which loan is best for you is to sit down with a financial advisor and discuss the different options available to you. Not all loans are the same, and after a meeting with an individual that knows what they’re talking about, you’ll quickly learn this.

4. You can change your monthly payments

Unfortunately, this is not always the case, especially for those that have taken out private loans. When you graduate, you are (depending on the loan option you chose) paying a fixed, monthly amount. Oftentimes, as many learn too late, it’s difficult if not impossible to lower your monthly payment, even if you can’t afford it. While there are options out there, such as consolidation and income-based repayment, these options are not made available to everyone, and this is something you’ll want to discuss with your loan provider before it’s too late.

Again, everybody’s loan is different, so you’ll want to make sure you’re speaking with a representative from your provider to make sure you’re getting the most accurate information in regards to what your repayment plan will look like.

5. Your interest rates won’t change

Again, this may be true for some (those with fixed interest plans), but for others, these rates are subject to change, and if that’s the case, you can almost guarantee that they will.

A large portion of what you’re paying back to your loan provider is interest, which is unfortunate, but true. Interest rates are through the roof, and they continually increase. So if you can sign up for a fixed interest plan, do it. If you don’t, you can bet that the rates are going to fluctuate, and it’ll rarely, if ever, be in your favor.

6. You can always consolidate your loans

Again, and unfortunately, this is not true for everyone. While consolidation is an option that will decrease your monthly payment, it is not an option that’s available to everyone. Think about it, loan providers are running a business. Why would they want to offer you a lower monthly payment? That means less money for them.

This is a fine-print-type situation, so you’ll want to be aware of it prior to signing up for your loans, as paying monthly payments on your loans separately can get expensive very quickly.

These are myths that are all too common when it comes to student loans. So educate yourself about your loans, be prepared for your repayment period to begin, and make sure you’re making smart financial decisions.

This will help to get you started, but take a little time to do some research regarding your loan and others to make sure you’re making the best decisions for yourself.

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