If you have student loans, it’s important to understand common student loan myths to avoid losing money. Whether refinancing your college debt, paying off a loan early, or looking into loan forgiveness, know the truth before changing your loan status.

Myth 1: You Can’t Pay on Your Student Loans While in School

Those enrolled at least halftime in a degree program won’t have payments on most federal subsidized loans until six months after graduating or leaving school. The government pays the interest on subsidized loans during college. However, the interest on federal unsubsidized loans begins to accrue from the first loan disbursement.

Though not required, you can make payments on your loans while still in school. This will keep loan balances low and save more on interest over the lifetime of your loan, particularly for an unsubsidized loan.

Myth 2: Paying off Your Student Loans Is Always Your Top Priority

Federal student loans typically have lower interest rates than private education loans. If you have an average amount of student debt (around $35,000) and a career with a competitive salary, paying down your student loan over many years can be more manageable than aggressively paying them off as soon as possible. It may be smart to talk to an accountant or financial advisor to decide whether it’s more financially sound to make normal student loan payments each month and save your extra money for long-term investments like a down payment on your first home.

Also, don’t worry if you can’t make overpayments every month, particularly if the interest on your loans is low. The most important thing is to make your student loan payments on-time every month. On-time payments positively affect your credit score and give lenders a consistent history of monthly expenditures.

Myth 3: Refinancing Your Student Loans Is Always a Smart Option

Refinancing may seem like a wise move, but there are some fairly significant tradeoffs you have to consider. If you have a low credit rating or no credit history at all, lenders may not even be willing to work with you to find a favorable interest rate on refinanced loans. Refinancing at great rates is rarely available to anybody with a credit score below 700.

Speak to your servicer about your available repayment plan options before making up your mind about refinancing. It’s not a decision you can change your mind about later, so it’s important to be sure refinancing is your #1 option before you sign anything.

Myth 4: It Costs Money to Apply for Consolidation, Deferment, or Other Repayment Plans

If you’ve taken loans through the federal government, it will never cost you money to apply for loan consolidation, deferment, or an income-based repayment plan. If a third-party provider manages your college debt, don’t be fooled into paying for these services.

Instead, call your loan provider or review their website to learn how to apply for these repayment options. Also be aware that applications for repayment plans can take up to six weeks to process, so plan accordingly and continue to make your usual monthly payments until you receive an approval notice.

Myth 5: Student Loan Forgiveness Doesn’t Apply to Me

Depending on your loan types and your career field, you may be eligible for some form of student loan forgiveness. The most appealing forgiveness option is for individuals employed in government or not-for-profit organizations. Thanks to the Public Service Loan Forgiveness (PSLF) Program, most Direct loans are eligible for forgiveness after 120 qualifying monthly payments. A percentage of each loan under the Federal Perkins Loan Program may also be forgiven.

Want to learn more? Log in and talk to an IonTuition counselor for additional information or a quick line directly into your servicer.