The Big Payback
Remember that your student loans are real loans, just like your car loan, your credit card or (if you have one) your mortgage. Your student loans must be repaid even if you don’t get the job you want after graduation, or if you don’t finish your degree. Student loan payments should only be a small part of your starting salary after school ends. Keep your future salary in mind when borrowing, so that repayment is not an excessive burden.
TEN THINGS YOU SHOULD KNOW ABOUT STUDENT LOANS Expand
- Borrow only what you need. Student loans are a great way to help pay for school, but they must be paid back – with interest.
- Have a plan. Map out the cost of your entire education and how you will pay for it.
- Create and follow a monthly budget. Know how much you have and where it is going. Create and after-graduation budget to see how your loan payments will affect your lifestyle after you leave school.
- Understand your loans. Do you know the difference between subsidized and unsubsidized loans? Federal and private loans? Fixed interest and variable interest loans?
- Know who “owns” your loan. Your loan servicer manages your federal loans and can assist you if you run into difficulty during repayment.
- Set up an online account with your servicer while you are still in school. You will be able to keep track of your loan activity and keep your contact information current, so you don’t miss any updates once you graduate.
- Make payments while you are still in school. Even if you make small payments ($5.00 per month), you will reduce your principal or interest before you are required to pay. This will lower your monthly payments after you graduate.
- Repayment options are available. If you have difficulty paying your loans, contact your servicer (remember, you already have an account!).
- Repayment is easier when your other debt is under control. Excessive credit card debt, lavish vacations, or a car that you really cannot afford may cause you to have difficulty repaying your student loans.
- Ask for help! If you are having difficulty figuring out how to afford your tuition, or (after you graduate) how to repay your loans, help is available. Talk with the Financial Literacy Manager in the One Stop while you are in school or your loan servicer after you graduate.