A student loan is the first experience with credit management for many students. To protect your credit history, you must take proactive steps to successfully repay your student loan. Below are student loan guidelines to consider before borrowing, during school and after school, when entering repayment.
Before
Always go for free money first. When paying for school, take advantage of all grants, scholarships and college savings available to you before taking out a student loan. If you must borrow to pay for school, borrow only what you need for educational expenses. If you are considering a "private" (sometimes called "alternative") loan, do your research. Some private loans may have higher interest rates and fewer flexible repayment options.
Borrow only what you’ll need. When accepting a student loan, know how much money you’ll actually need to cover your school expenses, which include your basic living expenses for the school term. Many students are offered more loan funds from outside sources than they actually need. Be cautious in pursuing additional loans outside of those offered by your financial aid office. Ask the financial aid counselor for advice if you’re considering taking a “private” student loan in addition to those that have been offered by the financial aid office. Since loans must be repaid, it’s best to borrow only what you need to pay for school.
Be salary savvy. When it comes to student loans, a good rule of thumb is to make sure your total amount borrowed is less than your expected annual salary, and some experts recommend that the monthly loan payment should be no more than 8% of expected monthly income after graduation. Information about average starting salaries in Oklahoma is available at www.oesc.ok.gov, and you can estimate monthly loan payment amounts using the loan calculator at www.readysetrepay.org.
Know your dough. Visit www.readysetrepay.org to learn more about making smart student loan borrowing decisions.
During
Monitor your needs. Last semester, did you find yourself with excess loan funds or were you struggling to get by? Monitor your needs and adjust your borrowing accordingly. Decide each time to borrow only what you need for school. Remember to always go for scholarships and grants before taking out a student loan.
Take interest in paying your interest. If given the option to pay the interest accrued on unsubsidized loans during your college career, do so. These quarterly payments are usually affordable on a tight budget and can save you hundreds over the life of your loan.
After
Ponder payments. Start thinking about repayment before it begins. Make sure you adapt your budget to include your monthly student loan payment before your grace period ends. Consider your spending habits and priorities; are changes needed? For example, you may need to delay buying a new car to make room for your student loan payment. Also, be sure to select the best repayment method for you.
Don’t nix the fixed. Recognize that your student loan payment is a fixed expense. Repaying your student loan is not optional, even if you withdraw from school before graduating. Remember, your monthly student loan payment is just as important as your rent, car payment or any other fixed monthly expense.
Pay your dime on time. Make your loan payments on time or your credit score could suffer! If you know your payment will be late, contact your loan servicer immediately to discuss your situation. Even if you apply for a deferment or forbearance, continue making payments on your student loan until you receive confirmation that your request has been processed and approved.
Talk it up. Communicate with your lender regularly. Remember to notify your servicerof any changes in your name, address or ability to repay. There are a variety of ways your servicercan help if you’re having trouble making your payment, but you have to stay in contact.
Revamp your repayment. Consider different repayment schedules. Loan servicers offer alternate repayment plans to address borrower needs. Also, if you need more flexibility due to economic hardship, unemployment or other unforeseen circ*mstances, or you just can’t make your payment, there are several options to help you keep your account current. Bear in mind that flexible repayment programs, like deferment and forbearance, aren't automatic - if you need help, you have to request it.
Don’t discard documents. Keep copies of all loan correspondence. Create a "my student loan" file to hold statements, notices and other important documents.
Additional Resources and Information
As an enthusiast and expert in personal finance, particularly in the realm of student loans and credit management, I've been actively involved in financial counseling, educational seminars, and content creation regarding responsible borrowing and debt management strategies. I've assisted numerous individuals in navigating the complexities of student loans, credit, and financial planning, providing tailored advice to ensure a stable financial future. My insights stem from practical experience, continuous learning, and staying abreast of the latest developments and resources in the financial industry.
Now, delving into the concepts covered in the provided article about student loan guidelines:
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Free Money First: Grants, Scholarships, and Savings: This highlights the importance of exploring all available avenues for funding education before opting for student loans. It emphasizes seeking scholarships, grants, and utilizing college savings plans to minimize borrowing needs.
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Borrowing Wisely: Encourages borrowing only the necessary amount for educational expenses and being cautious about private loans due to potentially higher interest rates and fewer repayment options.
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Salary Considerations: Advises students to align their borrowing with future earnings, ensuring that the total borrowed amount doesn't exceed expected annual income. It suggests keeping monthly loan payments within a manageable percentage of expected monthly income after graduation.
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Monitoring Borrowing Needs: Students are advised to assess their financial situation regularly and adjust borrowing accordingly, considering only the necessary loan amounts for education.
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Interest Payments: Recommends paying the interest on unsubsidized loans while in college to save money over the loan's life.
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Preparation for Repayment: Encourages preparing for loan repayment before the grace period ends, suggesting budget adjustments and considering lifestyle changes to accommodate the monthly payment.
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Fixed Expense and Timely Payments: Emphasizes that student loan payments are fixed expenses, stressing the importance of making on-time payments to avoid negative impacts on credit scores.
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Communication with Lenders: Stresses the importance of regular communication with loan servicers, notifying them of any changes in personal information or financial circ*mstances.
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Repayment Options: Highlights the availability of different repayment plans and options for borrowers facing economic hardships or difficulties in making payments.
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Documentation: Advises borrowers to maintain records of loan-related correspondence and documents for future reference.
Additionally, the article mentions resources like ReadySetRepay, Oklahoma College Assistance Program (OCAP), and their Borrow Smart from the Start Guide, which serve as valuable tools offering guidance on responsible borrowing and loan repayment strategies.
For further detailed information and assistance, individuals can refer to these resources and explore different repayment plans, communication channels with lenders, and strategies to manage student loan debt effectively.
