Myths and Facts About Student Loans

Student loans are often the most necessary form of debt but also some of the most expensive. In fact, student loan repayment can be a burden for 20 years to come. When you are considering student loans, do not fall into believing common myths.

Myth: Student debt is a part of life.

Many students believe debt is unavoidable because college is so costly. However, the choices a student makes will end up determining how costly college is. Is it really worth going $100,000 into debt to obtain that pricey private university education? Or, would you benefit just as much from attending a cheaper public institution? If finances are a priority, you will find there are a lot of affordable options that will allow you to pay your way through college instead of going into debt.

Myth: Federal loans are always the best options.

There are many benefits to federal loans, but the key benefits are only available to a narrow window of people. For the neediest borrowers, federal loans tend to present the cheapest solutions. For borrowers who do not qualify for need-based loans, private loans can be much more flexible and just as affordable. This is particularly true if you are willing to look at financing college as the sum of many parts including scholarships, grants and loans. By combining all of these options, the actual loan sum can be small enough that the flexible, private loans provide a greater advantage at only a small additional expense.

Myth: Student loans will pay for themselves with higher incomes in the future.

There is no guarantee you will find the high salaries you are looking for just because you have a college degree. On the whole, studies show college graduates do make more over the life of the loan. This is not true insome fields, however. For example, IT professionals with a 2-year degree can earn as much as IT professionals with a 4-year collegiate education. The same goes for many technical professions such as nursing or becoming an emergency response provider. Higher degrees in particular, such as Master's degrees orPhD's are even less predictable. Those students who get a PhD in order to become a college professor may find they will not be out of debt for a long time to come.

Myth: I will be able to start making loan payments as soon as I graduate.

The job market is never certain. Any school, including a trade school, that promises immediate hire after graduation is likely over-promising. Students can be shocked to learn that it will take months to find employment after graduation. If the loan payments do not have a grace period and are due immediately, then many students will find they are racking up interest fees, late payment charges and a host of bad credit reports immediately upon leaving school. It is best to elect a payment plan that provides for someflexibility in the case you cannot immediately make payments when you graduate.

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