5 Common Mistakes Students Make When Applying For Loans

Applying for a student loan is a great way to cover up your college fees. You don't need to burden your parents and friends by asking them for money. Just apply for a student loan and pay it back when you can. And you feel good when you’re finally able to cover up your expenses. But a lot of students end up in debt because of these longs. In this post, we discuss some of the common mistakes to avoid when applying for a loan. Without further ado, let’s get started.

Not Exploring Options

You need to explore all the options you have. Enrolling in a college just because it is popular or your friend is there is not really a good idea. Instead, you should look for colleges that offer the same course at lowered fees. This doesn't mean you should lower your goals, rather look for other colleges that give you a similar quality of education and equal job opportunities. By considering other options, you can end up saving a lot of money.

Lack of Research

Some students go for the loan without doing any research. They visit a bank they trust or apply at a financial institute their friends or relatives suggest. However, third-party information is not your best source of guidance. Instead, you can turn to the internet, there are many crowd-source question-answer sites where you can ask questions and have them answered by experts or people who've taken such loans in the past. Moreover, there are loads of aggregator sites that will allow you to compare the feature of lenders after which you can make an informed decision. Scott Cooper Miami offers scholarships to the students. So, it’s better to consider everything you have. 

Taking a higher amount than you need

Some banks and lenders will push you to take a loan amount higher than you need. Never fall for such ploys, the higher the loan amount the more interest you have to pay. Some people take more than they need and use the extra money to sustain overly comfortable lifestyles. Remember, the loan is only to complete your education and not to give you a good lifestyle during your college days. It may seem like a mother's advice, but if you follow it, it will help you get out of debt faster and start earning for yourself faster.

Going for over-optimistic repayment plans

Now that you've chosen a college with lower fees and got the best possible lender along with the right loan amount, you shouldn't be over optimistic with your repayment plans by selecting a short repayment schedule. You should be conservative and choose slightly longer repayment tenure, one that you can safely repay your loan without straining your wallet. Some students opt for quick repayment plans thinking they'll be able to handle repaying the loan but only end up defaulting on payments and paying more in the end due to late payment charges.

Letting Mom And Dad Do Everything

It may seem easier to hand over the FAFSA and other financial aid paperwork tasks to your parents, but that could be a big mistake. Many students who let their parents handle the financial side of college planning find that they are unaware of the amount of debt they have taken on and are unfamiliar with the student loan process, including repayment terms and conditions. To avoid any unhappy surprises at graduation, I suggest tackling the process yourself. Be sure to keep track of how much money you have borrowed and understand when your repayment period will begin. It’s also important to estimate your monthly loan payments before you take out any loans. Nothing is worse than having your grace period end and finding out that your student loan payments exceed your anticipated paycheck.

Ignoring prepayments

Making prepayments before you join your university may not attract prepayment charges and will reduce the total interest you have to pay. Further, if you get a job before the repayment schedule starts, you can begin to make prepayments and reduce the burden when the time comes to pay back the loan.