As with any complicated financial dealings, there are some pretty obvious ways to screw up when getting a student loan. These include things like not filling out the FAFSA form correctly or taking the first offer before shopping around. Those are common errors.
Less common, however, are the mistakes that student loan borrowers make that can easily be avoided. And with so much at stake, student loan borrowers can’t afford to make many mistakes.
According to a U.S. Department of Education study released this month, 238,000 Americans defaulted on their student loans in 2008 (the most recent year that student loan default data was collected). The national default rate is up to 7.0%, compared to 6.7% in 2007.
If you want to avoid that fate, it’s best to not only keep a close eye on the common traps that can plague student loan borrowers, but the uncommon ones, too. Here are three good places to start:
What’s a little fibbing between friends, or between borrowers and lenders? It's a lot, actually. If you fudge any financial information on a loan application, you’ll lose the loan and open yourself up to any fees and fines linked to falsifying loan documents.
Play it straight on your finances, or those of your parents. They’re at the top of the list a borrower will check when verifying your loan eligibility.
Don’t borrow more than you need.
Studies show that student loan shouldn’t comprise more than 10% of a borrowers monthly income. Yet borrowers continue to take more money than they might need for college.