Avoid Making these 6 Mistakes With Your Student Loans
In Canada, the average full-time student’s annual tuition costs hover around $6,000. And that’s just tuition, not including all the other expenses students contend with.
If you’re living on campus, the residence costs can easily pile on another $6,000. Books for a semester cost as much as $1,000, depending on your field of study. With all these expenses, it’s no wonder that post-secondary students are turning to student loans to make ends meet.
But instant loans can be more trouble than they’re worth if you’re not using them correctly.
Are you making any of these student loan mistakes?
1. Using your student loan as cash
Your student loans are meant to help you pay for your education. Even though you may qualify for more than enough money to qualify your tuition fees and then some, it’s dangerous to think of your student loans as ‘free money.’ That money isn’t really yours yet. You’ve only been loaned it. You’ll have to pay every dollar back (with interest!) once you’re finished school.
If the money from your student loans isn’t going directly to school related expenses (like tuition, books, and campus housing) put it in the bank. Your future self will thank you when you have to pay it back!
2. Not considering other options first
Student loans are great if you have no other options to pay for your education. Fortunately, there are often other alternatives you haven’t tried.
Many students will find they can qualify for a variety of bursaries or grants. Take a little time before each school year to research scholarships you might qualify for. Some may require high academic standing, while others may require you to write an essay, or be a part of a particular group. It never hurts to explore your options – you never know, you might find you qualify for thousands of dollars in scholarship money that, unlike a loan, you don’t have to pay back!
3. Thinking that student loans are a necessary part of life
It’s been engrained into our culture that attending post-secondary and obtaining a university or college degree is a must to get ahead and create a great career for yourself. The truth is, if a university education isn’t for you, there are plenty of other career paths out there that don’t require you to obtain a student loan that you’ll spend the next decade, or more, of your life paying off.
Consider other career paths that don’t require university or college degrees, and decide what’s right for you. University or college isn’t necessarily the right path for everyone!
4. Decide that your loan means you can skip working
Just because you can afford to live on the cash loan amount you’ve been given doesn’t mean you should. The best thing you can do for your credit is to get a jump on paying your student loans back while you’re still in school. That means taking on a part-time job to pay for your living expenses not directly related to school, and perhaps saving a little extra to pay back your loans when the time comes.
Sure, being in school and holding down a part-time job can be tough, but so is watching a significant chunk of your paycheque swirl down the drain each month when you have to pay back your loans.
5. Not reading the fine print and other details
One of the costliest errors made with student loans is not reading them carefully. Do you understand the loan repayment terms? Do you know how much interest you’ll be paying?
These are important things to understand so you don’t end up paying additional penalties when the time comes to start making loan payments. For example, in Ontario, students are given a six-month grace period after they graduate before they have to start making payments. However, interest starts accumulating immediately after graduation. Knowing the difference, and making payments immediately after you graduate can save you a significant amount of money.
6. Paying off the wrong loans first
Once you’ve graduated, and it’s time to start paying back all your debts, it’s natural to want to repay your student loans quickly, wipe them from your memory, and restart with a clean slate.
However, student loans tend to have fairly low interest rates. If you have other debts with higher interest rates that are competing for your attention, make paying these your first priority. This usually means credit card debt should be paid first!
Are you drowning in student debt? Magical Credit offers a variety of quick loan options to help you make ends meet. Apply for an instant loan between $2,000 and $10,000 now. Our instant cash loan approval process takes as little as one business day!