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7 Student Loan Myths To Stop Believing

Natalia Lusinski

January 28, 2020

While there are a lot of facts out there on student loan debt, there are a lot of myths about student loan debt, too, everything from the best ways to repay it to how student loan forgiveness works.

“The reality is that college students are likely committing to one of the largest debts in their lifetime at a very young age,” Simon Zhen, research analyst at, tells Pillar. “It’s essential that they understand the student loan repayment process so they there are no surprises when they graduate and enter adulthood with such a major financial burden.” 

Of course, student loan borrowers of all ages can benefit from understanding the repayment process and deciphering facts from fiction. Logan Allec, CPA, Certified Student Loan Professional (CSLP), and owner of Money Done Right, agrees. “Apart from your mortgage, your student loans may very well be the largest debt obligation you take on in your lifetime,” he tells Pillar. “The implications of getting something wrong with something of this magnitude can be devastating.” 

For example, he says, imagine that you took a lower-paying job at a non-profit because you thought all you had to do was work at a non-profit for 10 years in order to qualify for Public Service Loan Forgiveness (PSFL) — without realizing that you also had to be on an income-driven repayment plan. “At the end of those 10 years, when you discover that you do not qualify for forgiveness, wouldn’t you feel crushed, in addition to the financial setback,” Allec says. “This is why it’s extremely important to get the facts right when it comes to student loans.” He adds that some people are willing to drive an hour to save $50 on the latest tech gadget, but aren’t willing to educate themselves on their $50,000 in student loans. “Don’t be ‘penny wise and pound foolish,’” he says. 

Here, finance experts share common student loan myths. The sooner you stop believing them, the sooner you can get on the right track when it comes to student loan repayment.

1. “Private student loans are more expensive than federal student loans.”

While you may think federal student loans are the way to go, Zhen says one example of a student loan myth is: “Private student loans are more expensive than federal student loans.” Different lenders offer various interest rates for student loans, he says, and it’s important to consider private student loans, as well. “Be reminded to consider the financial hardship programs that are available with federal student loans and compare them with the hardship options offered by private lenders,” he adds.

2. “You don’t have to worry about student loans until after graduation.”

Zhen says another student loan myth is: “You don’t have to worry about student loans until after graduation.” He says while many student loans won’t begin to require monthly payments until after graduation, students can often begin tackling their college debt at any time if they have the income to do so.”

3. “My debt is insurmountable.”

“My debt is insurmountable” is a prevalent student loan myth, Daniel J. Mendelson, owner and CEO of BYE Student Debt LLC and author of BYE Student Loan Debt: Learn How to Empower Yourself by Eliminating Your Student Loans, tells Pillar. “While it can certainly feel this way sometimes, millions of people can — and do — overcome huge amounts of debt by sticking to a plan, diligently saving, and repaying their loans,” he says.

4. “My loans will be forgiven by someone.”

According to Mendelson, another student loan myth that some people believe is: “My loans will be forgiven by someone.” He says that while it is possible, the PSFL program and a few others exists to a small group of professions and employers. “There are dozens of options to help mitigate your repayment or get some or all of it forgiven, but most of us will be on the hook for the full bill,” he adds. “I also would not hold your breath for any politician to forgive your debt.”

Zhen, too, says it’s a myth that student loan forgiveness programs can help you eliminate student loan debt since they have a long list of requirements that must be met. “More often than not, applicants for loan forgiveness are denied,” he says. “According to data from the U.S. Department of Education, more than 99 percent of applicants for the PSLV program were denied during the program’s first year, from May 2018 to May 2019.”

5. “Public Service Loan Forgiveness is automatic after 10 years.”

Similar to the myth that your student loans will somehow be forgiven, Allec says that another falsehood is that “Public Service Loan Forgiveness is automatic after 10 years of working with the ‘right’ kind of employer.” He says that while, yes, you do have to work for a qualifying type of employer, but that doesn’t mean you are eligible for PSFL simply by working at a qualifying employer for 10 years. “One becomes eligible for the forgiveness after making 120 qualifying payments, payments under an income-driven repayment plan while working at a qualifying type of employer,” he says. “Also, note that only Direct Loans are eligible.”

6. “There’s always bankruptcy as a last resort.”

Zhen says another common student loan myth is: “There’s always bankruptcy as a last resort.” But he points out that student loan debt is one type of debt that is nearly impossible to be discharged in bankruptcy. “Less than half of one percent of private student loan borrowers are successful receiving a discharge in bankruptcy,” he says.

7. “My student loans were not worth it.”

Mendelson says another myth some student loan borrowers believe is: “My student loans were not worth it.” But, there is a lot of data showing a college degree can dramatically increase earnings over a lifetime, he says. “The problem occurs when students take out large amounts of debt in order to get a degree that will not increase their earning potential,” he adds. Before choosing a college or university, he says it is important to evaluate your cost of schooling and balance it with your desired profession.

However, if someone ended up changing degrees or schools and increased their debt burden, they may end up believing student loans were not worth it. “If you diligently plan your career and then diligently have a plan to pay it off, student loans can and will continue to be a good investment for millions of Americans,” says Mendelson. So, yes, student loans are worth it.

Without separating student loan myths from facts, it’s easy to take the myths at face value. “But separating fact from fiction is critical so that students do not end up making mistakes or assumptions that can cost them thousands of dollars,” says Mendelson.

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