Pennies-Nickels-Dollars: Managing Student Loans

Before I start, I have to share this hilarious video by Youtuber Chescaleigh sharing her frustration with student loans (a Beyonce' "Countdown" parody):

I love it! lol  


When I finished my undergraduate degree,  I was  blessed to not have any student loans.  However, after  completed graduate school at an expensive private university about 2 years ago, I finally felt the burden of student loans that I had heard many of my college peers complaining about.  Looking back, there are many  things that  I know now that I wish I would have known back then when I was taking out all those loans.  Here are some tips to help you minimize and manage student loans before, during, an after college:

Before college:

• Consider a cheaper school. You can get a quality education without the private school price tag. Research what degree programs are offered, extra services like job assistance and exposure to companies in your field, and choose a school that matches your needs without breaking the bank. Find out how much each college/university costs here. 
• Look into other forms of financial aid. Apply for scholarships and grants to get free money for your education. Also, see if you qualify for work study programs (which allow you to get paid while working on campus, and at my University these jobs also left you with ample time to study while on the clock. A win-win!)
• Take AP/advanced classes or community college classes. This allows you to get college credits at a lower cost, and can shorten the amount of time you have to spend at the university (meaning fewer semesters that you would have to pay university tuition!).
• Set a budget or create an estimate of college expenses (examples are usually available by the university financial aid office, or create your own using a template ) and use that to base the amount you borrow. Don't request the maximum you are offered unless you REALLY need it. It may seem like free money at the time, but every dollar you borrow today will cost you more after graduation when you have to pay it back (with interest). 
• Choose the right loan. From federal loans to private loans, student loans to parent loans, there are a variety of different loan options available. Use websites like Simple Tuition to compare loan options, and sites like Collegeboard and FinAid.gov for information to help you choose a lender.

During college:

• Begin paying interest on loans. During college you will get billing statements showing the interest that has grown since you requested the loan. If you don’t pay it while in college, once you graduate it will be added to the original loan amount so you will basically be paying interest, on the interest. 
• Get a job to help pay for expenses or to begin paying back. Every little bit you pay off while in college will save you in interest in the future. 
• Review your spending and adjust loan amount annually. Sometimes the first year people take out large loans because they worry about not having enough to live. Before your sophomore year, look at how much you were loaned the 1st year, see how much you actually used based on expenses and adjust in the following years. 
• Consider loans in your career search. Consider applying for jobs where you can get loan forgiveness after years of making payment. For example, there is the Public Service Loan Forgiveness Program for public service employees (ex. teachers, federal/state employees, hospital workers) where after 120 qualifying loan payments, the remaining amount you owe is forgiven.

After college:

• Keep up with due dates. It’s so important that you don't miss payments dates because it will affect your credit score. Your payment history makes up 35% of your FICO credit score so it is important that you keep up with when payments are due. Setting automatic payments may be a good option, because some lenders offer reduced interest rates as an incentive for automatic payments. 
• Seek help if you have financial hardship. If you find yourself having trouble paying your student loans, explore options of deferment or forbearance that can temporarily stop your loan payments or decrease your monthly payment amount. The deferment option can also be used to temporarily suspend payments if you are re-enrolled in school or unemployed. 
• Know your options for loan repayment. Federal loans have a standard 10 year repayment plan, however there are options like the graduated repayment plan—where your payments start out low and adjust every couple of years as it is expected that your salary (and ability to repay the loan) will increase in the future—and the extended repayment plan which spreads your payments out for 25yrs; however, keeping the loan for 25yrs will mean that you will pay more interest overall. There are also income based or income contingent that guarantee that your loan payments will not exceed a certain percentage of your monthly income. Find out more about all of these repayment options here.