Although education today is increasing valuable--it can be costly. That's why most students need to borrow money to help pay their college expenses.

Fortunately, federal student loan programs make money readily available. But students sometimes borrow more than they need and often don't handle their loans very well. That can mean BIG TROUBLE later on.

That's why you're required to participate in an "Entrance Interview" if you borrow through the Federal Direct Loan Program. You'll have an opportunity to learn about debt management. You can find ways to plan your loans, so that you are in charge of your own borrowing.

You'll also find information you will need to manage your student loans comfortably once you leave school. You can save a lot of money by using this information to your advantage.

If you start right now to educate yourself about your loan(s), you really can make borrowing work to your advantage--now and years from now when you are repaying your loans.  

PLANNING YOUR BORROWING

Planning will affect your financial health now—and many years from now.  For a relatively small effort, planning pays big dividends.  For most students the first look at their college expense budget is a big surprise.  But that budget is also the first good step to taking control of  the money involved. 

To determine how much you need to borrow, first find out what your expenses will be for the academic year.  Make a chart to help build a budget, adding or subtracting to suit your personal situation.  Put a dollar amount to each item you have listed, even if it is only an estimate.  When you total up the items, you have an expense budget. 

Look at your resources—where you are going to find the money to meet expenses.  Resources include: your savings, your parents’ savings, your contribution from work, your parents’ contribution from work, federal/state benefits, scholarships, grants, loans, or other aid (ROTC, athletic, internship, etc.).  Remember keep loans as a last resort. 

Now you have a complete budget.  It is a picture of the money you plan to spend, and where you plan to get the money.  You can decide to keep that picture or change it—now, before you spend the money, and before you borrow more than you might really need. 

The final step is to calculate the loans you are likely to need for each year you plan to be in school.  Your borrowing power is based on the income you will earn after leaving school – which determines the monthly payment you can afford.  Your ability to repay in the future should be a caution in your borrowing decisions now.  Will your anticipated income allow you to comfortably handle your estimate of monthly loan payments?  You may find that, by borrowing carefully, you will have no problem fitting your payment into your budget.   Click here to view and print a copy of a budget planning worksheet.  You will need to have Adobe Acrobat 3.0 or higher to access this form.

KEEPING TRACK

Don't lose track of how much you've borrowed! And from whom you have borrowed! A student loan is serious business--just as serious as a car loan or a home mortgage. Certainly, if you had a car or home loan you would know how much you borrowed, from whom, the interest rate and terms of repayment.

That information is just as important for your student loans. Maybe more so. Click here to view and print a copy of a loan history worksheet.  You will need to have Adobe Acrobat 3.0 or higher to access this form.

 OTHER WAYS TO PAY FOR SCHOOL

There are other ways to help pay for your education besides borrowing. Most students choose several ways so they can use their valuable time, money and effort to maximum benefit. Relying too heavily on any one source for funds may result in overwork, poor time management, poor money management, or poor academic performance.

As you continue through college. It's healthy to periodically evaluate your resources, abilities, opportunities and lifestyle. See how you can use them to your advantage.

WORK - Most students today have some type of job, especially older students who usually work full-time. Your school's Financial Aid Office can determine if you are eligible for the Federal Work Study Program. It would be part of your financial aid package by providing a job, probably on campus, for a specified number of hours each week. Graduate and professional students may find it difficult to work much due to their course schedules so we don't normally offer this program. If you are interested please submit a letter in writing.

Full-time or part-time, work requires careful budgeting of time so that neither your classes nor your health suffer from neglect. Because your education is a big financial investment in your future, it makes sense to give your classes a top priority.

GRANTS & SCHOLARSHIPS - These funds are "free money" requiring no work or repayment. It might be worth your while to investigate what special funds your school (or church, company, organization, etc.) may provide and for which you may be eligible.

YOUR TIME

Keep in mind that there are only 168 hours in a week! That's all the time you have to spend. If you run short, you can't borrow more time like you can get a loan for more money.

When you begin school you will be able to see the time taken up by each activity--and whether that way of spending time is acceptable to you. You may find you will need to set different priorities for your time. If you find that you have extra time on your hands then you should definitely consider a part-time job. Studies have shown that students do better in school if they budget their time wisely.

REPAYMENT

Each loan program has it's own repayment terms. Most loans become due six months after you cease to be enrolled at least half-time. Average repayment period is ten years, however some loan programs can be extended for thirty years. But remember--the longer you take to repay a loan the more interest you will repay. See the following examples.

If you borrow $50,000 at 8.25% interest rate and you repay the loan in ten years your monthly payment would be approximately $613 per month. The total amount you would repay is listed below:
 

If you choose a thirty-year repayment plan your monthly payment would be approximately $350 per month but the total amount you would repay is considerably more. See below:
 

Each loan program also has it's own deferment and forbearance options. A deferment is a temporary postponement of loan payments. No interest accrues on a subsidized loan during a deferment period. Forbearance is an arrangement to postpone or reduce monthly payment amounts for a limited and specified period, or to extend the repayment period. The borrower is charged interest during forbearance.

It is important to note that some loan programs have eliminated the deferment option of serving in an internship or residency program. However, lenders will normally grant a forbearance during this period.

Check with your school or lender to find out deferment and forbearance options available for a specific loan program.

How does a deferment or forbearance work to your advantage? You can avoid putting financial pressure on yourself if you are having money problems. Most importantly it may help you avoid the consequences of default.

What is default? Failure to repay a loan in accordance with the terms of the promissory note. Some of the consequences of defaulting are bad credit rating, garnishment of wages, etc.

Who initiates a deferment or forbearance? You do. Contact your lender and explain your circumstances. They will send you the appropriate form to complete. It takes four to six weeks for the form to be processed. You will be responsible for any payments that become due while your form is being processed.

SIX KEYS FOR SUCCESSFUL STUDENT LOAN MANAGEMENT

1.  Open all your mail.  An unfamiliar return address does not mean the contents are not important. 

2.   Read anything pertaining to your student loan(s).  If there is something you do not understand, call your lender's customer service department or contact the Financial Aid Office for help. 

3.  Maintain a file of all your student loan documents.  Keep copies of applications, promissory notes, disclosure statements and paid-in-full notices.  Include copies of all communication that you originate as well as everything you receive. 

4.  Make all regularly scheduled payments.  Protect your good credit rating and your future success. 

5.  Ask for help if you find yourself heading for trouble.  Do not wait!  Contact your lender or loan holder immediately if you cannot make a payment. 

6.  Keep in contact with your lender or loan holder.

If you follow these six keys for successful student loan management you should be able to answer the following questions about each of your loans.

• I know how much principal and interest I owe for every educational loan I have ever borrowed. 
• I have the address of every lender or loan holder for all my loans and for which I still owe money. 
• I have in my possession copies of all the important documents related to each of the educational loans I have borrowed. At the very least, this includes application forms, promissory notes, disclosure statements, notices of loans, copies of deferment and other forms, and other statements and correspondence between me and each lender. 
• I have organized these papers into a filing system so that I can retrieve any document I need without any difficulty. 
• I have recorded each of my loans so that I can easily identify for each loan how much I owe, the interest rate on each loan, the organization to which I must repay the loans and their addresses. I am also able to update this in case of any address change by the organization or if my loan is sold to another organization. 
  I am able to calculate my monthly, annual and total repayments for each of my loans.

  Checkout youcandealwithit.com for additional helpful information.