What’s one of the biggest mistakes college students are making today? Using their student loan money to pay for things other than what they’re supposed to: meaning, instead of paying for tuition, books, and room-and-board. An increasing number of college students are using loans to buy luxuries, like flat-screen TVs, sound systems, clothes, and trendy furniture. They’re also spending the money on parties, shopping sprees, expensive spring-break trips and even cars. And the average student now graduates with $25,000 in debt, which can literally take a lifetime to repay.

So, here’s what you need to know about student loans:

  • It’s not “free money.” Every penny you borrow has to be paid back, with interest! And the interest starts accumulating while you’re still in school.
  • Just because you can take out more money, doesn’t mean you should. Follow the catchphrase of FinAid.org: live like a student while you’re in school, so you don’t have to live like one after you graduate. In other words, save money any way you can. For example, don’t rent a 3-bedroom house with 3 people – split the cost with 6!
  • Go for the bargain. Decorate with used furniture, buy groceries instead of take-out and shop at Goodwill. Also, take advantage of the free and low-cost entertainment on-campus.
  • Look into grants and scholarships. That money doesn’t have to be paid back. Most students are eligible for some sort of financial assistance and a lot of scholarships go unused because nobody bothered to apply for them.
  • Don’t miss payments or default on your student loan after graduation. That can ruin your credit! And these days, it’s hard to start your working life with bad credit. If you’re having trouble making your payments, check out the debt relief website IBRInfo.org.