Student loans and budgeting can be big obstacles for students. While it might seem easy at first to take out the loans and worry about paying them back later, it’s important to think about your financial situation and take the right steps to protect your credit and financial standing.
To gather useful financial aid tips, we sat down with two financial aid professionals at Ultimate Medical Academy (UMA). Lee Chatman is a Student Loan Counselor at UMA, and Gregory Lammar Cash (the best name for a financial aid advisor!) is a Financial Awareness Counselor at UMA.
Here are their nine top tips for taking control of your loans and staying on track to pay them back.
1. Only borrow what you need.
It’s tempting to take out more than you require for school. Getting checks in the mail seems exciting, because it feels like you’re receiving bonuses that you can spend however you want. But that’s not the reality, warns Cash.
“Checks get sent, money gets spent,” he said. “Then two to four years later, you have an issue.”
Cash strongly recommends only borrowing exactly what you need to pay for school. Chatman agrees.
“The temptation to take the excess is always there,” Chatman said. “However, these are federal loans and they are intended to be paid back. So it’s not free money. Use your loans wisely.”
2. Complete your exit interview.
The federal government requires schools to give an exit interview to students who graduate or leave for other reasons. These interviews are designed to tell students exactly what they owe and explain the repayment options available to them. Our financial aid professionals recommend paying close attention in these meetings.
“The federal government wants every borrower to have a successful way to manage their student loan payments,” Chatman said. “The exit interview documents are a very good beginning to that process.”
3. Check out StudentLoans.gov.
The Department of Education (ED) created StudentLoans.gov to offer tools and resources for borrowers. You can find information on the different repayment options, including repayment plans based on your income.
You can also find tools and applications to help you pay back your loans and fill out certain forms. Chatman advises every student to visit this site at least once and preferably multiple times. It’s that useful.
4. Know your servicers, and make sure they have your contact information.
A servicer is the company contracted with the ED to manage the repayment of your student loans. Examples of these servicers include Nelnet, Great Lakes Educational Loan Services, Navient and more. You need to know who your servicer is, and you need to make sure they can reach you to provide student loan information, Chatman advises. You can usually create an account online to keep your information current.
“The servicer will need to email or mail you your payment amounts and when you’re scheduled to make your payments, and they need your contact information to do that,” Chatman said.
5. Work with your financial aid advisor.
Your school’s financial aid advisors are there to make sure you understand the process, Cash says. Their success depends on how prepared you are to manage your student loans, so they’re on your team.
Listen to them, ask questions and get as much information as you can out of your advisor. It’s especially important to do this when regulations change, because that could mean new requirements for your loans. Always use your financial aid advisor as a resource.
6. Don’t be afraid of repayment.
Loans—and the prospect of repaying them—can make students nervous. Sometimes they get so nervous that they refuse to engage in the process, which is the worst thing students can do. According to our advisors, repayment is nothing to be afraid of.
“The federal government has set up a lot of ways to manage your repayments,” Chatman says. “So if you’re concerned…things like repayment plans can address your payment amount based on your income. For some folks, that is absolutely necessary.”
There are various levels of income-based repayment plans, and they can help make paying your loans manageable. So don’t be afraid, and don’t put it off. Face it head-on. You’ll be in a better situation if you do.
7. Avoid student loan scams.
There are a lot of scams out there trying to take advantage of anxious students, Chatman warns. These scams use social media and email to criticize schools and dangle the chance of complete student loan forgiveness. A hard-and-fast rule for avoiding scams? “The only entities a borrower should deal with in repaying their student loans are any of the schools they attended and the servicers themselves,” Chatman says.
8. Know about in-school deferments and how they’re filed.
If you decide to go back to school and will attend at least half time, there’s good news: You’re eligible for an in-school deferment. That means you can pause repaying your loans while you’re in school. But there are a few important things to know about this process, says Chatman.
Your new school is responsible for filing your deferment, and they must file with each servicer for all of your loans. If they miss one, then you could end up defaulting (failing to meet the legal obligations of your loan) because you aren’t paying. So make sure to check with your new school, particularly if you have more than one servicer.
9. Take control of your finances.
Both of our advisors agree: There’s a lot of information available to students about student loans. The key to keeping on top of your loans, Cash says, is to hold yourself accountable. That includes being aware of regulation changes that affect your payback options, understanding how much you owe and knowing the interest rate on each loan.
“Educate yourself and attack those loans,” he advises. “When you have that six-month grace period, take the time to really find out how much you owe and how you’re going to break down your budget—just get on it. You don’t want to be bogged down with frivolous spending for short-term solutions, because they have long-term repercussions.”