SPONSORED CONTENT -- (StatePoint) A student loan can be a valuable tool to help you earn your degree – and with the right plan, it doesn’t have to be stressful.

“Smart borrowing starts with knowing the basics. The more you understand, the more confident you’ll feel,” says Dan Kennedy, chief marketing officer, College Ave. “Our research finds that while a majority of students are focused on money management, they could use a little more information about how borrowing works.”

To help ensure your student loan helps pave the way for your future success, not a future headache, Kennedy recommends avoiding these common borrowing mistakes:

Skipping federal student loans: Before taking out a private student loan, exhaust your other options first. Free money you don’t have to pay back is always preferable to a loan, so look into scholarships. You should also fill out the Free Application for Federal Student Aid (FAFSA) to unlock federal student aid, including grants, scholarships and federal student loans. Getting your Federal Direct student loans from the government will often beat private loans in terms of interest rates and repayment options. Plus, if you go into a qualifying field, the government may even grant you student loan forgiveness.

Borrowing too much: Borrow only what you need to pay for schooling and basic living expenses. This will help eliminate the temptation to use the money on items that are not an investment in your future. You should also avoid borrowing more than you can comfortably repay based on your expected future income. A College Ave March 2025 student survey found that 67% of those who expected to have student loan debt post-graduation didn’t know or were unsure of how much their monthly payments would be. Before taking out a loan, use CollegeAve.com’s student loan calculator to get a sense of its overall cost and monthly loan payments.

Not shopping around: If you do end up taking out a private student loan, it’s important to pay attention to lenders’ interest rates and repayment options. Unlike federal loans, which have fixed interest rates for all borrowers, private student loan interest rates vary from lender to lender. And because your repayment plan can impact your monthly payment and overall cost, it’s key to choose one that fits your budget. Whatever loan you do go with, understand its terms, so there are no surprises down the line.

Not having a cosigner, if needed: As a college student, you likely don’t have an established credit history or sufficient income and may not get approved for a private loan on your own. Consider improving your chances of getting approved and securing a lower interest rate by adding a cosigner, like a parent, to your loan application.

Not having a repayment strategy: The College Ave survey found that 76% of students say that they confidently pay their bills on time each month and 63% are working toward personal financial goals. Carry these healthy financial habits with you to the repayment stage of your loan. Having a plan for repayment can make a big difference down the road. Think about when you’ll start making payments and how much you can afford each month. The more prepared you are, the less stressful it’ll be when it’s time to pay it back.

College is a big investment, and having a smart approach to paying for it is essential. After applying for financial aid and scholarships, and maximizing your income and savings, do some groundwork to ensure that if you have to borrow, you are borrowing smart.

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