6 Tips on how not to
Get Stuck with Student Loans

college planning articles and tips

1) You Need To Start Planning Ahead Before Going to College

What a lot of students and parents even fail to realize is that you need to start planning early if you want your child to have any chance of not paying off student loans for 30 years after they graduate. Planning ahead often isn't thought of because a lot of people like to live in the moment and would prefer to worry about one thing at a time but this can be a costly mistake.

Start planning ahead all of your future finances and budget to help balance out what needs to be done for the future.

2) You Need To Create a Budget While In School

A lot of college students don't worry about creating a budget because they're mostly concerned with partying or passing their classes. However, if you don't start creating a budget now and start a savings, you'll never realize the importance of saving money and how to balance your financial budget later down the road.
Creating a budget essentially lays out a mental mind map of the future, how much you'll have down the road and how much will be needed to pay off. Try to sort out the things you need versus the things you absolutely don't need.

3) You Should Always Make Payments While In School

A lot of different loans and private loan programs will let you start making payments while you're in school. Why is this great idea? If you're living on campus, you're saving money, rather than if you were to be living in your own apartment, where it would cost significantly more.
The more you pay off while you're in college, the less you'll have to pay off when you graduate.

4) Stop Putting Loans in the Parents' Names

This is one common mistake when applying for a loan that many people make. Let the student put their own name on the loan application. The only time a parent's signature should be required is if a co-signer is necessary. It's common that Federal loans will have a much lower interest rate than a loan such as the PLUS loan. This is a viable option that will save the student money down the road.

5) Remember, That No Loan Is the Exact Same

Here are some the different types of loans:

1. Federal Perkins Loans: This is a loan that's awarded to students rather than applied for. It's a very low interest rate (5%). Undergraduates may borrow up to $4,000 a year.
   
2. Federal Subsidized Stafford Loans: The government will pay the interest rate annually (which is 3.4%) while you are in college. Undergraduates may obtain up to $3,500.
   
3. Federal Unsubsidized Stafford Loans: The interest rate will come in at a fixed 6.8%. How much can an undergraduate borrow? Up to $5,500 with the deduction of the subsidized Stafford.
   
4. Federal Parent PLUS Loans: The interest rate will come in at a fixed 7.9%. Aid received will be deducted from the amount that can be borrowed.
   
5. Private: The rules and how much is owed will greatly depend on the vendor.

6) Your Necessities versus Wants

While in college, it's hard to compare necessity versus want, but it's a valuable skill you're going to need once you're out in the real world anyways, so you might as well start while you're in here. Make sure, that you're evaluating what you absolutely need versus what you want such as food, toys, games, clothes, shoes, expensive stylish haircuts, etc.

Author Bio: Noel Finlay works for FastCash.org a company that provides information on loans.

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