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Did you know you can decrease your
student debt burden significantly before your semester even begins? Save yourself some money and a palm to the
face by avoiding these common mistakes.
Mistake #1: Avoiding the Financial Aid Office Like The
Black Plague. The financial aid office is there to
help. Yes, lines can be long and the
discussion can be tedious, but it can help you save. Have them make sure your filings are correct –
you don’t want to take out extra loans if you don’t have to. Use them to help you select the best loans
available with good terms and competitive interest rates or no interest rates
at all. If you have questions about your
terms, ask them for clarification so you can be completely informed about what
you’re obligated to do.
Mistake #2: Accepting the Tuition Bill As Is. At most schools, you are able to opt out of some
charges if you are uninterested in utilizing the programs. For instance, the gym, computer lab, and
athletic events are all things charged under the cost of tuition, and you’ll
have to pay whether or not you use them unless you ask to opt out. If you own a computer, prefer to run outside,
and enjoy theater instead of sports, then why pay for the next 15 to 30 years
of your life on things you won’t use? By
opting out, you can borrow less money.
Mistake #3: Celebrating with Your Reimbursement Check. It’s probably the biggest check you’ve ever
received in your life to date. Thousands
of dollars just for you? You’ll want to
offer to buy the next round at the bar, but you shouldn’t. Do you really need all of that money for
cost-of-living? Can you budget better,
get a job, take your bike to classes, anything to reduce the cost-of-living to
less than what the school estimated? If
so, you should return the check or whatever amount of the check you can do
without. Again, borrowing less money at
the start will decrease your debt burden upon graduation.
Mistake #4: Ignoring Interest Payment Bills. Maybe your terms allow you to forgo your
interest payments while you are in school, but you shouldn’t just crumple the
bill up and toss it into the trash.
Interest payments are important to pay as soon as you can because it is
likely that your loan agreement has compound interest. What that means is that for every interest
payment you miss, it accrues (or adds) to the original
loan amount. However, when the next
interest bill is calculated it is off of that new outstanding balance. So for every interest payment you miss, the
larger the next interest payment is and the larger the outstanding balance
becomes. As you can imagine, the
outstanding balance can spiral out of control pretty quickly and, thus, has
caught so many new graduates off guard in the student debt crisis we have
today.
Mistake #5: Throwing Out Loan Information. You’ll probably receive a ton of mail with
statements and terms, but do not throw these things away! Keep a file or scan them or ask for your
documents to be sent electronically and organize it all on a computer file
(that you back-up). You’ll want to keep
track of how much you borrow, the terms of your agreements, who your lenders
are, and who your servicers are (which can be different than lenders). This information will allow you to update
your lender and/or servicer of any address or name change and help you avoid
default when it is time to make repayments.
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