...you borrow only what you need. Many students borrow the maximum that they are eligible to receive, only to discover that they owe tens of thousands of dollars once they graduate school. Plan accordingly and keep loan debt manageable--between 8% and 15% of your monthly gross income.
...you do your homework and choose a lender that best suits your needs as a borrower. Some lenders offer interest rate reductions, delayed repayment options, or low or no upfront fees.
...you make your student loan payments on time. Late payments can have a negative impact on your credit report. You may not be able to secure loans for a house or a car with a poor credit rating. If you fail to pay your Stafford Loan, the Federal government can withhold your federal income tax return refund.
...you talk to you lender or servicer if you are having difficulty repaying your loan. Numerous programs exist to help make your student loan payments managable.
For most students, a college education is not possible without borrowing money through a student loan program. Whether you borrowed a Stafford Loan, a Perkins Loan, or an Alternative Loan, you have probably accrued some sort of educational debt while seeking your degree. Remember that you signed a promissory note and you will eventually be responsible for repaying your student loans plus interest.
Don't sweat it! Educational loan programs are generally set up to be "student friendly". For instance, the Stafford Loan program offers a six month grace period before repayment begins, while the Perkins Loan program offers a nine month grace period. On the other hand, some Alternative Loans offer interest only payments while the student is enrolled in school.
Researchers have found that manageable student loan debt is between 8% and 15% of your monthly gross income, so keep that in mind when borrowing. According finaid.org's student loan calculator, you would need to earn $25,513.20 a year in order to make payments of 10% of your monthly gross income ($212.61 per month) if you borrowed $21,000 at 4% interest. Your repayment term would be ten years. Given the same senario, you could earn as low as $17,008.80 a year if you wish to devote 15% of your gross monthly income ($212.61 per month) to your student loans, but you may experience some financial difficulty in doing so.
If you are having difficulty making your student loan payment, contact your lender. Numerous programs exist in making your student loan payments managable. For more information, see "Loan Repayment" under the "Current Student" section of our web site. You do not want to default on your student loans, as this will affect your credit rating. You may not be able to secure loans for a home or a car, or even worse, your federal income tax refund can be withheld.