Student loans are often the first major financial responsibility that college graduates are faced with after leaving school. In a lot of ways, student loans are unlike any other loan that a person will take out in their lifetime. It's not uncommon for borrowers to start believing these common student loan myths. But the sooner you stop believing them, the sooner you can get on the right track when it comes to student loan repayment.
#1 “Being debt-free is unattainable.”
When you're looking at what feels like a mountain of student debt you might start thinking that "my debt is insurmountable.” However, Daniel J. Mendelson, author of BYE Student Loan Debt: Learn How to Empower Yourself by Eliminating Your Student Loans explains, “While it can certainly feel this way sometimes, millions of people can — and do — overcome huge amounts of student debt by sticking to a plan, diligently saving, and repaying their loans,”. If you’re dealing with a temporary setback, try to start making larger payments as soon as possible to keep the balance under control.
#2 “Federal student loans are my only option.”
While it may appear that federal student loans are the best option, the truth is that different lenders offer various interest rates for student loans, and it’s important to consider private student loans, as well. However, as we have seen this past year, it's really important to be aware and consider the financial hardship programs that are available with federal student loans and compare them with the hardship options offered by private lenders.
#3 “My student loans were not worth it.”
The last myth we'll mention is that a growing number of student loan borrowers believe: “My student loans were not worth it.” But, there is a lot of data showing a college degree can significantly increase earnings over a lifetime. The issue occurs when students take out large amounts of debt in order to get a degree that will not increase their earning potential. If that's the case, the value of your degree might not necessarily be the education you received but rather the relationships and network you created while in school. If you feel like you left school with a degree that ultimately left you in a position where it's hard to find employment, it's worth reaching out to your alumni association and seeing what benefits they offer. Some of these benefits include alma mater job boards and networking events.
Without separating student loan myths from facts, it’s easy to take the myths at face value. “But separating fact from fiction is critical so that students do not end up making mistakes or assumptions that can cost them thousands of dollars,” says Mendelson.
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