I’ve been working in financial aid for almost three years. I’ve counseled hundreds of students during this time. Talking to students about student loans is always interesting. Some understand what the loans are, while others don’t. In most cases, I try to educate the students and dissuade them from taking them out if they don’t truly need them. Unfortunately, some students still make mistakes when it comes to the loans. In today’s post, I will share a few of them with you.

Believe it or not, I’ve had several students, take out students loans and didn’t realize that they had to pay them back. That’s always an awkward conversation. I figured that by the time you’re in college, you would understand how a loan works, but I was wrong. Instead of laughing at them, I make sure that they leave the office understanding student loans and how they work.

The next mistake that I’ve seen students make regarding loans is that they accept too much money. Some students may only have a balance of a couple of hundred dollars, but they end up taking out more loans than they need. In my opinion, doing that for one or two semesters isn’t that bad, but if it happens every semester it could be a problem.

Depending on how long you’re in school for that loan money will add up. The less you take out, the less that you will owe when it’s time to pay the loans back.

For the next student loan mistake, I want to piggyback off the one I just discussed. Some people take out student loans just for refunds. That’s one of the easiest ways to get into debt. As a student, you think that it will be a while before you graduate. That time goes by fast. For example, let's say you are in school for 5 years (no summer classes) and received an extra $3000 each semester because you wanted a student loan refund. By the time you graduate from college, you would owe at least $30,000 because of these refunds. That is a bad move. I understand that many students have student loan debt these days, but the amount of $30,000 could have been avoided.

A lot of older returning students make the next mistake which is defaulting on a student loan. A loan default happens when the borrower fails to repay the loan. A student loan will go into default if a payment is not made in more than 270 days. If you loans go into default, several consequences can happen. Your loan is assigned to a collection agency; your wages can be garnished, your credit will be destroyed, and you won’t have any eligibility for additional federal student aid. The crazy thing is that there can be even more consequences. A loan default is nothing to play with. Getting your loan out of default status can take a long time. I’ve seen students miss semesters because of that process. I’d suggest that you make some kind of payment to your student loans so that you won’t get into default.

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The final mistake that I’ve seen students make when it comes to student loans is that they keep the cycle going. Some students continue to take out more loans from any source possible, whether it's through the FAFSA or with a private student loan lender. They continue to take out more than they need even after myself or other counselors have talked to them. It sucks to see them making that mistake. They end up learning the lesson the hard way which is a few years after college. I hope that they take the time to at least educate their younger siblings and future children about student loans if they decide to go to college. The cycle has to end somewhere. Students have to stop getting into the massive amounts of student loan debt.

Over the years I’ve seen quite a few students make mistakes regarding their student loans. If you are currently a student, realize that you don’t have to be a statistic. Only take out the amount of student loans that you need and you will be fine. If you are out of college, and you took too much money out, talk to younger people that you know. Tell them your story and educate them about student loans if you can. They will thank you for doing that.

Student loans are very powerful. That money has the ability to help students pay for college if they need help. It also has the ability to create a lot of debt. If you need student loans, make sure that you know what you’re doing.