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What to Know Before You Borrow

Take advice from Kizzy on what to know before you borrow student loans.

Kizzy Preston

August 18, 2011

What to Know Before You Borrow
Most students graduate high school ready to take on the world. Perhaps they are accepted into their first choice college, or even if it is a second choice school at least the freedom of living away from home is something to look forward to. The financial aid award letter arrives in the mail and mixed in with the grants and work-study funds are student loans. Before you borrow, know this... While all schools require each student to complete an entrance interview which details the seriousness of accepting a student loan, many students still do not truly understand. Much like the credit cards that are handed out left and right to newly independent students, student loans may seem like an easy solution to immediate needs. Don't forget about the long term repercussions. Student loan funds MUST be repaid. Often this concept is not grasped until students borrow more in student loans than could possibly be repaid with an entry-level job’s salary.

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College seniors who graduated last year owed an average of $24,000 in student loan debt, up 6% from the year before, according to a report from the Project on Student Debt. In the CNN article, “College grads: $24,000 in debt,” Blake Ellis writes, "Student loan debt is on the rise and fewer graduates are getting jobs to pay back what they borrowed.”
At this time when the economy is shaky it is more important than ever to be wise with student loan borrowing. There are serious consequences if the funds are not paid back. According to, if student loans go into default, meaning you haven’t repaid them on time as you promised to do, several things may happen:

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• Your account will go into collections- This will negatively affect your credit report and make it hard for you to buy anything on credit, i.e. car, house, get new credit cards. • You may be sued for the entire amount of the loans- Instead of paying the student loans off at a reasonable monthly rate, the whole balance of the loan will be due at once. • Your wages from work may be garnished- Before you get your paycheck up to 25% of it may be taken until your entire student loan balance is paid off. • Your income tax returns may be taken- Most people look forward to receiving an income tax return check each year, but if you are in default on your loans, the government will keep your check and apply it to your loan debt. • Your loans will not go away through filing bankruptcy- Even when bankruptcy makes a person no longer responsible for paying his or her mortgage, or car note, they are still responsible for student loan debt. When it is time to accept or reject student loan funds consider what type of job you can expect to get after graduation. The average entry level salary of a college graduate is between $30,000-$50,000, depending on the degree type and previous work experience according to CNN. In a bad economy these entry level salaries will be lower. Figure out how you will realistically pay the student loans back, before you borrow. To learn more about student loans before you borrow visit

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