As student loan payments to the U.S. Department of Education are scheduled to restart later this year, we wanted to resurface a few critical factors that families should be cautious of when taking on debt for college education, as covered in a Wall Street Journal article, “Four Mistakes Students and Parents Make When Getting Student Loans”. The following points are noted in the article:

Factor No. 1: Spend time adequately exploring debt alternatives. Families should thoroughly investigate scholarship and grant opportunities before considering loans. There are many organizations and websites that offer help for students seeking scholarships. Additionally, students should consider whether they might be eligible for federal programs like the Public Service Loan Forgiveness, although borrowing decisions should not solely rely on this possibility.

Factor No. 2: Try not to take on too much debt. Before borrowing, students and parents should assess the potential future salary of the graduate using online tools like Salary.com or Glassdoor. It's important to calculate take-home pay after taxes and factor in living expenses, rent, and other costs to determine if loan payments are manageable.

Factor No. 3: Avoid turning to private loans before maximizing federal loan eligibility. Federal loans typically offer more protections and relief programs than private loans. Families should exhaust federal loan options before considering private loans. If private loans become necessary, careful research should be done on interest rates, repayment terms, and any protections or relief options available.

Factor No. 4: Understand loan specifics. It is crucial to be educated about how loans work, such as the differences between subsidized and unsubsidized federal loans and who is responsible for repayment. Understanding these details will help families make informed decisions and avoid potential pitfalls.

Overall, careful planning and research are essential when taking on debt for higher education to avoid financial hardships in the future. Families should consider all available alternatives and understand the implications of borrowing before committing to loans.

At Omnia Pathways, we believe that paying for college is one of the largest, most significant investments that a student and their families make in their lifetimes. We recognize this process is overwhelming and offer assistance in your search for scholarships, grants, and loan opportunities. Please see our Services for more information and schedule a Free Consultation, to help you accomplish your college admissions goals.

Citation: Winokur Munk, Cheryl. “Four Mistakes Students and Parents Make When Getting Student Loans.”  Wall Street Journal , 9 October 2022, https://www.wsj.com/articles/student-loan-mistakes-students-parents-college-11665175405