My Secure Advantage Home

Fact or Fiction: Student Loans

So you took the plunge and traded future debt for a college degree, and now you’re ready to face your student loan payments… at least we hope. You’re probably pecking away at your keyboard, exploring ways to pay back your loan, and hopefully avoiding forums from random people claiming to be so called experts.
By MSA Staff

So you took the plunge and traded future debt for a college degree, and now you’re ready to face your student loan payments… at least we hope. You’re probably pecking away at your keyboard, exploring ways to pay back your loan, and hopefully avoiding forums from random people claiming to be so called experts.

Before you trust the World Wide Web, read about some common facts and myths that you might come across during your search.

  1. Federal and private loans are different. FACT. The federal government funds federal student loans – unlike private student loans, which are non-federal loans provided by lenders, such as banks, credit unions, schools or state agencies.
  2. There are no serious consequences to default. FICTION. Not paying your loan on time is a bad idea. You should always maintain communication with your loan servicers and try to avoid missing payments, which can result in wage garnishments or damage to your credit. Student loans must be repaid, and there is no way around it.
  3. It’s difficult to discharge student loans through bankruptcy. FACT. Unlike other forms of debt, student loans are federally protected against being written off through bankruptcy except in extenuating circumstances. Even during bankruptcy (though your loans will be deferred), fees and finance charges will continue to incur until the loan is paid off.
  4. Deferring or lowering payments on loans doesn’t cost you a lot of money. FICTION. Assuming a 6.8% interest rate over 10 years for a $25,000 loan, you’d pay over $9,500 in interest on the life of the loan, and if the same payment was over a 20-year period, the amount of interest paid jumps to over $20,000, and that’s if you paid on time! We recommend that every borrower adopt a mindset of paying off all debts, including student loans, as soon as possible so that the total interest paid over the life of the loan is kept to a minimum.
  5. Americans owe more in credit card debt than student loan debt. FICTION. Recent statistics show there are over 40 million borrowers who collectively owe almost $1.5 trillion in student loan debt, which is over $600 billion more than the total U.S. credit card debt.1
  6. Over 50% of student loan borrowers don’t fully understand the terms of their loans or the borrowing process. FACT. 65% of borrowers could use a little help when it comes to understanding the details of their loan and how the repayment process works.2

When it comes to student loans, understanding the best way to tackle your debt while thinking about other financial priorities can be pretty overwhelming. We work with people all the time who want guidance for this stage of life. If you’re in a similar place, be sure to take advantage of talking to a Money Coach. And hey, just so you know, we don’t think you need to survive on Top Ramen to save money either. Give us a call at 888-724-2326, and we’ll look forward to helping you with strategies to repay your student loans!

1“A Look at the Shocking Student Loan Debt Statistics for 2018.” Student Loan Hero, March 2018. https://studentloanhero.com/student-loan-debt-statistics/. Accessed 6 August 2018.

2“11 Facts About College Debt.” Dosomething.org. N.d. https://www.dosomething.org/us/facts/11-facts-about-college-debt. Accessed 6 August 2018.

Facebook ShareTweetReddit shareLinkedIn shareEmail share

More Like This

Tips & Tricks

Student loans and retirement are two major financial topics at the heart of employees’ financial concerns, and they not only have a crippling effect on each other but cause a ripple that negatively effects all other financial goals. Who is affected? Around 40 million Americans have student loans, and the amount of overall student loan […]

Success Stories

It’s a whole lot easier tackling financial challenges – like managing credit cards, taking on student loans and understanding insurance policies – when you have a team of money coaches beside you.  Ryan made great progress in just two months because he could address each issue with a Money Coach who specialized in that particular […]

Tips & Tricks

Fraudsters know that students comb the internet for scholarships and loans, so they set up fake financial aid opportunities to pull in unsuspecting students.  If you’re searching for financial aid, stay safe with these tips: Remember the FAFSA is free!  It’s even in the title — Free Application for Federal Student Aid, so don’t believe […]

Stress & Psychology

Like many Americans, Ariel was living paycheck to paycheck, and she found it harder when transitioning to a single income.  With a broken relationship, student loans, surgery, and the end of a lease, the emotional distress certainly wasn’t helping.  Luckily, Ariel found hope and support through one-on-one consultations with her Money Coach, Lee, so she […]