Avoid these student loan mistakes if you live off campus


Don’t let life off campus hurt your future finances. (iStock)

Living off campus can seem ideal for college students. You have more space, there is no annoying RA nearby and guests can come and go as they please. In many cases it is also cheaper. For example, at Millersville University, on-campus living costs nearly $48,000 over four years of education. Paying for off-campus housing? That would be less than $20,000.

But those savings shouldn’t mean you slacken your financial vigilance when it comes to paying tuition and other associated expenses. To really maximize what off-campus living can do for your wallet, you need to be smart about how you manage your money — and more importantly, your student loans.

Don’t worry about navigating the student loan options yourself. credible can help compare student loan companies (and hopefully you’ll get some of the lowest rates for what you’re looking for).

3 student loan mistakes to avoid

Want to make sure your off-campus life is as successful as possible? Then avoid these common mistakes:

  1. Not filling in your FAFSA
  2. Relying on Student Loans for Expenses
  3. Borrow the wrong amount with school loans

1. Not filling out your FAFSA

You must always complete the free application for: Federal Student Aid or FAFSA, prior to each school year.

The FAFSA allows you to apply for federal and state scholarships – essentially free money for your education – as well as federal student loans, which are usually better interest rates and more favorable conditions than private ones.

“Always borrow federally first, because federal student loans charge lower fixed interest rates that don’t depend on your credit scores,” says Mark Kantrowitz, a student loan expert and author of “How to Appeal for More College Financial Aid.” “Federal student loans also offer better repayment terms.”

If you do not qualify for federal student loans, you may want to consider taking out private student loans. Credible can guide you through the application process to make sure you get the best deal possible.


2. Relying on Student Loans for Expenses

Living on campus keeps a lot of your costs under control. Your food costs are lumped together with your housing costs and you don’t have to worry about overspending on restaurants, electricity, water or other general living costs.

But when you pay for off-campus housing, things change. You are responsible for the cost of food and utilities, and it is generally just easier to spend on non-essentials. While student grants can certainly help offset your extra living costs, it’s important not to live beyond your means (because it could mean borrow extra student loans and incur more debt).

“Make a budget and stick to it to avoid living beyond your means and making non-essential purchases,” says Leslie Tayne, debt counseling attorney at Tayne Law Group. “The more money is borrowed, the longer and more challenging it can be to pay back student loans.”

If you find your expenses are spiraling out of control, consider getting a part-time job, taking a side job, or even doing some tutoring to earn extra money. On-campus job opportunities can also be a great way to earn money and gain experience.


3. Borrowing the wrong amount on loans

Student loans are necessary for a large number of American students. In fact, about 70% of the class of 2019 have taken out student loans at some point in their education.

However, the CARES Act continues to provide federal loan borrowers with some relief from their loan repayment with the ability to pause payments without interest. In support of the coronavirus pandemic, President Joe Biden extended the legislation until September 2021, which could help millions of Americans eventually pay off their debts.

Student loan forgiveness remains a controversial topic on both sides of the aisle as the Biden administration weighs in on the possibility of paying off current student loans and easing the burden of college fees on students.

But while taking out student loans is common when it comes to college costs, it’s also something you should approach with caution. Before borrowing money, use a student loan calculator to carefully calculate how much you need to repay your loan. You can also crack the numbers using Credible’s free online tools.

“Student Loan Debt May Be Considered” good debt because it’s an investment in your future, but too much of a good thing can hurt you,” says Kantrowitz.

Ideally, you shouldn’t borrow more than you expect for your annual starting salary for your entire education, Kantrowitz says.

“If your total student debt is less than your annual income, you should be able to pay back your student loans in 10 years or less,” he says. “Otherwise, you will struggle to pay off your loan and will need a longer repayment or means-tested amortization to pay the monthly loan payments.”


it comes down to

If you’re using student loans to pay for your tuition, tuition, and enrollment fees, be sure to exhaust your federal options first. Then switch to private loans and use a online student loan calculator to measure costs and ensure that you only borrow what you need.

Finally, be sure to shop around for your lender. Student loan rates and the terms and conditions can vary greatly, as can the rates for a personal loan or car loan, so use a tool like Credible to get personalized rates from multiple lenders without affecting your credit score.


Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: [email protected] and your question can be answered by Credible in our Money Expert column.

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