Top 3 Student Loan Mistakes to Avoid: A Guide to Reducing Stress and Saving Money
Managing student loans can feel overwhelming, but it doesn’t have to be. By avoiding some common mistakes, you can make smarter decisions that reduce stress and even save you money in the long run. Here are the top three student loan mistakes we see borrowers make—and how to steer clear of them.
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1. Common Tax Filing Mistakes to Avoid
Your tax return plays a key role in determining your student loan payments if you’re on an income-driven repayment (IDR) plan. But too often, borrowers overlook how they file, which could end up costing them a lot over time. Here’s what to keep in mind:
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Lowering Your Taxable Income: Contributing to retirement accounts can reduce your taxable income, which may lower your student loan payments.
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Filing Separately (for Married Borrowers): If you’re married, filing separately can keep your spouse’s income from being counted in your loan payment calculation. This strategy could help reduce what you owe each month on your student loans.
By making smart choices with your tax return, you could save thousands—or even tens of thousands—over the life of your loan. Don’t let this opportunity pass you by!
2. Obsessing Over Interest Rates
When it comes to student loans, many borrowers focus too much on interest rates. If you’re pursuing student loan forgiveness, however, your interest rate may not be as important as you think.
If your loan will eventually be forgiven, the interest accrued doesn’t really matter because most or all of it will be wiped out. But seeing that interest balance grow can still feel discouraging—it’s natural to worry about the accumulating debt. Here’s the good news:
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Focus on Forgiveness, Not Interest: If you’re on track for forgiveness, don’t stress over your interest balance. It can feel overwhelming, but in the end, it may not even factor into what you owe.
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Know When Interest Matters: In some cases, interest is worth paying attention to, especially if forgiveness isn’t an option. But it’s not the only factor that matters—staying on track with your repayment plan is what counts most.
Letting go of your focus on interest can help reduce anxiety and keep you focused on your end goal.
Managing Your Student Loans Without Sacrifice
If you’re ready to tackle your student loans, you don’t need to live on the bare minimum or give up everything you love. With the right strategy, you can manage your debt without sacrificing your quality of life. Our goal is to prioritize what works best for you—no extreme measures required.
If you’d like help navigating these decisions and setting a smart repayment strategy, reach out to us. We’re here to help you manage your student loans with confidence and ease.