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Borrowers advised to take on student loans wisely to avoid debt
By Peggy Stillwell on Sep 11th, 2010
Student loan debt in the U.S. has increased from $605 billion in 2009 to nearly $829 billion this month, showing many Americans are borrowing money to pay for higher education. Although financial aid may help students pay for higher education, it can come back to haunt students who make a few key financial mistakes that add onto their debt after college.
Many borrowers often apply for more money than they need, the San Fransisco Chronicle reports. Students who take out more money for things they want, as opposed to things they need, are more likely to have trouble repaying their debt. Borrowers who attempt to spend all of the money they receive are also more like to find difficulty repaying the money in the future, the Chronicle notes.
In order to avoid damage to a payment history, financial analysts say staying on top of loan payments is the best way students can keep from falling further into debt. Defaulting on loans can result in costly penalties as well.
While consolidation and debt counseling is an option, borrowers are also encouraged to ask their employers for tuition reimbursement or forgiveness plans. These programs are growing in popularity with more businesses, ABC-13 reports.
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