Student loans are surrounded by myths — and believing them can cost students time, money, and peace of mind.
As a financial advisor specialized in student loans, I hear the same misconceptions year after year. Let’s debunk the most common ones with real facts and practical advice.
Myth #1: “I Don’t Need to Fill Out FAFSA Because I Won’t Qualify”
Truth: Almost everyone qualifies for some form of aid — grants, loans, or work-study.
In my experience, students with even moderate family income often get unsubsidized loans or institutional aid through FAFSA.
Skipping it means potentially losing thousands in funding.
Myth #2: “Federal and Private Loans Are Basically the Same”
Truth: They’re fundamentally different.
Federal loans are safer: fixed rates, forgiveness options, and income-driven repayment.
Private loans depend on your credit and have fewer protections.
I always tell students: “If you have a federal option, take it first.”
Myth #3: “Interest Doesn’t Matter If I Pay Later”
Truth: Interest never sleeps.
Even if you’re not paying during school, unsubsidized and private loans accrue interest from day one.
I once worked with a borrower who delayed payments — by graduation, her balance had grown by 15%. Small early payments can save thousands.
Myth #4: “Loan Forgiveness Is Automatic After Graduation”
Truth: Loan forgiveness isn’t automatic — it’s earned through specific programs like Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment forgiveness.
I’ve seen borrowers assume their loans would disappear, only to face surprise bills years later. Always confirm your eligibility and paperwork.
Myth #5: “Refinancing Always Saves Money”
Truth: Not always. Refinancing can reduce rates, but if you refinance a federal loan with a private lender, you lose all federal benefits — forbearance, deferment, and forgiveness eligibility.
Before refinancing, make sure your income is stable and your emergency fund solid.
Bonus Myth: “Defaulting Isn’t a Big Deal”
Truth: Default has long-term effects — damaged credit, wage garnishment, and loss of eligibility for future aid.
As an advisor, I’ve helped students rebuild credit after default, but prevention is far easier than recovery.
Expert Advice: How to Stay Informed and Protected
- Follow official sources like studentaid.gov for updates.
- Read your loan statements monthly.
- Keep copies of all correspondence with lenders.
- If unsure, ask a certified loan counselor before acting.
FAQs About Student Loan Misconceptions
Can student loans be canceled automatically?
No, forgiveness requires applying and meeting specific criteria.
Is it bad to have student loans?
Not if managed well — they can build credit when repaid responsibly.
Do private lenders offer forgiveness?
Rarely, only in cases of death or disability.
Final Thoughts
Myths spread fast — especially online. But making decisions based on facts will protect your finances and peace of mind.
As a financial advisor, my advice is simple: question everything you hear and verify through official sources. The truth will always save you money.
