Tips for Student Loan Borrowers
Signing a promissory note for a student loan may be your first experience of taking on a major debt. Investing in your future can pay off, but plan carefully to avoid investing in the wrong course of study and getting too deeply in debt. You must repay your loan. Making your monthly payments on time establishes you as a good credit risk for other loans. Here are some tips to help you borrow wisely.
- Find out from the school's financial aid office what other aid you can receive—grants, scholarships, and work-study—before applying for a loan.
- Ask the school financial aid office to explain your budget. Make sure you understand the total cost of attending school, including estimated living expenses.
- Schools have rules on making refunds to students who withdraw. Know the details of the school's refund policy before you enroll. Schools are required to provide you with this and other consumer information.
- Check into job opportunities in the occupation you've chosen before you enroll. Some people default on student loans because the schooling they received didn't lead to the job or pay they expected. Disappointment is understandable, but you still have to repay the loan.
- Borrow only what you need. For a quick estimate of how much you will pay based on how much you have borrowed, the interest rate and the repayment period, use the Loan Payment Calculator.
- Students receiving their first Stafford Loan must go through entrance counseling. The school you attend will give you information about this process.
- Use student loans only for your education. Giving false information, forging information or using loans for any purpose other than school expenses is against the law.
- When you begin repaying your loan, keep your payments up to date. If you have trouble with payments, contact your loan holder immediately.
- Consider paying a few more dollars each month to reduce the interest you'll pay over the life of the loan. The extra money is applied to the principal, which lowers the amount of interest you'll have to pay.
- If you have any trouble making your payments, contact your loan holder immediately. You may be able to get a deferment or forbearance. Before you enter repayment, you will go through exit counseling, which will explain what kinds of deferments and forbearances are available.
- Contact your loan holder about consolidating your student loan accounts. A Consolidation Loan can cut your monthly payments nearly in half, although you may end up paying more interest.