College Student Loan Myths Busted

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Student Loan Myths – BUSTED!

Written by: Lisa Phelps for Student Choice

The news these days is filled with stories about the student loan burden: students graduating with back-breaking debt, whether or not it’s even worth going to college, and how much student loan debt is ok to have. These are all important topics that college students should pay attention to.

What’s not so good are the myths that are circulated among students and graduates. This article will clear up any misconceptions you may have heard about student loans.

Myth 1: You always have to pay back your student loan debt.

Not always true! In fact, about 50% of borrowers can qualify for some type of student loan Forgiveness Program. People who enter the military (Army, Army Reserve, Navy, Air Force), become teachers, do volunteer work (Peace Corps, Americorps, Volunteers in Service to America), or pursue medical or legal studies may be eligible for Forgiveness Programs which can eliminate some or all of their debt for free. Amounts available range from a few thousand dollars to $60,00+. Check with your college financial aid office for more information and to see if you qualify.

Myth 2: The government isn’t flexible with student loan payments.

The first time you look at your repayment plan your jaw may hit the floor. Your initial thought may be that there’s no way you’ll be able to make the payments. Don’t worry. While everyone starts out with the Standard Repayment Plan of flat monthly payments for 10 years, there are a lot of other options available. Graduated, Extended, Income-Based and Pay-as-You-Earn are just some of the ways the government can restructure your payments. There’s lots of valuable information on how to make your payments more manageable at the StudentAid website.

Myth 3: You have to pay a professional to get help with your student loans.

Absolutely not. In fact, since everything with your government loans is standardized, there really isn’t much a loan consolidation company can do for you except lighten your wallet. They can get you the necessary paperwork and make some phone calls, but you can do that on your own, for free. If you need help, simply talk to your loan servicer. And if you prefer the personal touch, your college financial aid office has dedicated staff ready to assist you and you can even schedule one-on-one time to address your questions. They’re here to help, so don’t hesitate to reach out!

Myth 4: If you ignore them, student loans will eventually go away.

That might work for a headache or an annoying friend, but definitely not for your student loans. Even if you file for bankruptcy, your student loans still need to be repaid. The only way out is through a Forgiveness Program (see Myth #1). In fact, if you want to make your loans go away even quicker, it’s better if you don’t ignore them while you’re in school. If you make payments while you’re in school – even just a small payment here or there – you can reduce your overall debt AND the interest you’ll be required to pay back in the long run. Talk to your financial aid office to see how you can set these up and what benefits you may get by paying early.

Myth 5: I don’t have to worry about my loans until I graduate.

Technically you don’t, but it’s much smarter to keep track of your loans as you go. Visit the National Student Loan Data System (NSLDS) to track your federal loans and who is servicing them. If you have private loans, you can track those by getting a free annual copy of your credit report at Make sure you know how much you’ve borrowed, and what grants and scholarships you’ve received that don’t need to be repaid. And don’t forget Myth 4 – if you can, try to pay a little extra to those loans while you’re in school.

Myth 6: The activity on my student loans doesn’t affect my credit score.

Yes it does. If you miss payments or make them late – in other words, if you’re delinquent – that gets reported to the credit agencies and can negatively affect your credit rating.  A bad credit history can affect your ability to rent an apartment, get a cell phone, or qualify for a credit card. And if you go to get an auto loan, a lower credit score may cause you to have to pay a higher interest rate which will increase the size of your monthly payments. On the plus side, student loan debt isn’t considered bad debt (like credit card debt) so it doesn’t negatively affect your credit score as long as you’re staying on top of your payments and managing them responsible. If you need help figuring out how to manage your loans, stop in your local credit union and ask for a financial review and advice!

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These myths are just the start – have you heard any other crazy myths about student loans? Let us know and we’ll set the record straight.

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