Five Tips to Follow For Student Loans

by Scott Sery on March 6, 2013

College StudentsIn today’s competitive job market, it is almost a necessity to have a college education.  However, that education can be quite expensive.  Unless you had parents that were fairly well-to-do and they were able to save money for your education, or if you worked very hard during your summer breaks, you most likely needed to take out some student loans.  For those of us who have taken out college aid, the only hope is to structure a repayment plan that fits our budget.  For those who are yet to take the plunge, there are a few things to watch out for.  The biggest thing is to remember, this is not free money.

Shop Around

Not all loans are created equal.  Just like when you are looking for an auto loan or getting a mortgage on your house, make sure you shop around for your student loans.  Federal loans will all be mostly the same, but there are times when you need more than just what they will cover.  That is when you need to turn to the private market.  As the consumer, you hold all the power.  These companies want your money, if the terms are not what you want, you can walk away.

Use it Only for College

This may seem like a no-brainer, but countless college students every year spend their student loan money on things that are not exactly school related.  The loans should be used for three things: tuition, books, and living expenses.  While it is tempting to use your loan money to take that spring break trip to Mexico, having a lower loan balance will bring you more lasting joy than having blown your money on a pleasure cruise.

Know Your Loan

Before even looking at loans and their rates, know what types of loans are out there.  The federal government offers a few different varieties of loans.  The Stafford loan is available to just about everyone, and comes in a subsidized, and a non-subsidized variety.  For those who have a little more need, the Perkins loan can help to them meet their college costs.  Government backed loans are the most secure and often have the best interest rates, but there are times when you will need a little more than what is offered.  If this is the case, there are a lot of private lenders willing to give student aid.

Pay It Off

There are loan forgiveness programs available to people in certain situations.  But many of them require working for 10 or more years paying on the loan in hopes the government will cancel the debt.  Instead of waiting, follow the example of Joe Mihalic and structure your life to be debt free quickly.  Pay off the most expensive (highest interest rate) loan first, and you can save a bundle on interest charges.  Note: if you take this route you will lose some tax benefits, but being debt free is a feeling that cannot be explained.


Since not all loans are created equal, not all loans will have the same interest rates.  If you do not plan to pay them off quickly, look into loan consolidation.  Wrapping them all together and making one easy payment each month can save you money, and the hassle of writing multiple checks.  Just remember, it is almost never wise to consolidate federal loans into private loans.

Final Word

Student loans are great.  They help us achieve something that we otherwise would not be able to.  But they must be treated as loans, and not just a free pot of money.  For many, it is too late and we must focus on repaying the debt as quickly as possible.  Just because we put that spring break trip (or several of them) on our loans does not mean we can’t teach our kids not to do the same.

For those with Student loan debt, do you have any tips to share?

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Scott Sery

Scott Sery is a native to Billings, Montana. Within an hour in nearly any direction he can be found fishing, hunting, backpacking, caving, and rock or ice climbing. With an extensive knowledge of the finance and insurance world, Scott loves to write personal finance articles. When not talking money, he enjoys passing on his knowledge of the back country, or how to live sustainably. You can learn more about Scott on his website Sery Content Development

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