It's Time to UP YOUR BORROWING GAME

It's Time to UP YOUR BORROWING GAME...Time to PRACTICE HARDER, BUDGET BETTER and STRETCH YOUR DOLLAR FARTHER. It's Time To GET TO KNOW YOURSELF and figure out what loans you REALLY NEED. It's Time to THINK ABOUT A FUTURE YOU...a futre you that wants to be educated AND financially secure. IT'S TIME to BORROW SMARTER.

For many college students the decision to take on student loans is the first major financial decision they’ve been required to make. Prior to accepting student loans, it’s important to understand the benefits and the consequences of assuming student loan debt, as well as, understand your responsibilities as the borrower.

On principle, student loans are fairly straightforward: you borrow money (loans) that you use to pay for tuition and living expenses and then you repay those loans after completing your program and beginning your career.

While simple enough in principle, many students struggle to understand the impact that repaying student loans will have on their financial future. This leads to students borrowing more than they need and more than they can afford to pay back.

Did You Know?

  1. 2015 Graduates have an average of $35,000 in student loan debt.
  2. 75% of borrowers have made a personal or financial sacrifice--like postponing marriage, delaying buying a house, or working more than one job--because of their monthly student loan payments.
  3. The payments for $25,000 of student loan debt is $280 per month for TEN YEARS.
  4. For every $10,000 in student loan debt, you will pay $680 per year in interest.

Before You Borrow

To avoid student loan repayment regrets, try the following tips BEFORE you borrow:

One mistake students make is assuming that the cost of college only includes tuition-they fail to account for the cost of books, housing, transportation, and lost wages while they take classes. These other expenses can lead to high interest credit card debt in addition to student loans. That is a recipe for financial disaster. Visit this Cost of Attendance page for a better idea of the total cost of college.

Before even considering taking out loans for college, review your personal budget with this Budget Worksheet and trim out unnecessary spending. Even a few dollars extra that can go to paying for college up-front decreases the amount you will have to pay back later.

It’s easy to think of the future as a place where you will “get a job” and “make money” but putting some specific (realistic) figures to those phrases will better prepare you to make decisions about student loans. Student loan payments can make up a large percentage of your take-home pay, but if you have an idea of what that take-home pay, and your total projected income, will be then you will know how large of a student loan payment you can handle. Use this payment calculator to figure out what your future payment will be with different amounts of student loan debt.

Many students think of college as “their job” and choose not to work while taking classes. But, even a small part-time job can contribute to paying for college upfront and reduce the amount needed to be made up by student loans.

Many students think that if they can’t pay for ALL of their college tuition at the beginning of the semester, they HAVE to take out loans. That’s not true. Talk to the Cashier’s Office before taking out any loans and learn about payment plans that stretch the cost of college out over the length of your stay. This might be all you need to be able to pay for college out of pocket and not have to take out any loans.


If You Still Need A Loan

If you have tried all of these tips, and exhausted all other forms of financial aid (including scholarships and grants) and still need a loan see the Step-By-Step Financial Aid Process here.


After You Borrow

After you complete your program or stop attending, your federal student loans will enter deferment (a period in which you do not have to make payments towards your student loan balance) for six months. After that six month period ends, you will enter into loan repayment. Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time—for free.

Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to “National Student Loan Data System (NSLDS)”.

Types of Repayment

  1. Standard Repayment: This is the default repayment plan; you pay a fixed amount each month for ten years of at least $50.
  2. Graduated Repayment: In this repayment plan, payments start lower initially and increase every two years for ten years.
  3. Extended Repayment: In this repayment plan, payments can be either fixed or graduated, but they are spread out over a longer period of time-up to 25 years.
  4. Income Based Repayment Plans: There are a variety of repayment plans you may qualify for, based on your income, that would cap your monthly payment at 10 to 20 percent of your discretionary income for 20 to 25 years. The percentage is different depending on the plan.
    • Revised Pay As You Earn Repayment Plan (REPAYE Plan)
    • Pay As You Earn Repayment Plan (PAYE Plan)
    • Income-Based Repayment Plan (IBR Plan)
    • Income-Contingent Repayment Plan (ICR Plan)

Trouble Making Payments:

If you can’t keep up with your payments, you might qualify for deferment or forbearance. These options allow you to pause payments on your loan without penalty, if you qualify. The two are very similar, with the main difference being eligibility and the length of time involved, (deferment can run up to three years, while a forbearance is usually for a year or less).

View the printable version of Repayment Information here, or visit studentloans.gov for more information.