Student Loan Management
A student loan is the first credit experience many students have. To protect your credit rating, take proactive steps to borrow responsibly and successfully repay your student loan. To better understand student loans, and your rights and responsibilities as a borrower, visit StudentAid.gov and download OKMM’s Borrow Smart From the Start booklet.
Before Borrowing
- Seek free money first. Maximize all grants, scholarships and college savings available to you before taking out a federal student loan. To reduce the amount of loan dollars you may need, apply for free money throughout your college career by completing the FAFSA (Free Application for Federal Student Aid) annually. For tips and resources on finding grants and scholarships, explore the Are You Looking for Money? booklet.
If you must borrow to pay for school, explore all your borrowing options to find the loan that best meets your need. Federal student loans typically have lower interest rates and better repayment options than private loans, but do your research. - Borrow only what you need. Determine how much money you’ll actually need to cover your educational expenses, which include your basic living costs for the school term, before you accept a student loan. You may be offered more loan funds from outside sources than you actually need. Be cautious and talk to a financial aid counselor if you’re considering taking a private student loan in addition to those that have been offered by your school’s financial aid office. Since loans are a long-term commitment that must be repaid, it’s best to borrow only what you need to pay for school.
- Consider your future salary. When borrowing student loans, a good rule of thumb is to make sure your total amount borrowed is less than your expected starting salary, and some experts recommend that the monthly loan payment should be no more than 8-10 percent of your expected monthly income after graduation. Research starting salaries in Oklahoma by visiting the Oklahoma Wage Network, and estimate monthly loan payment amounts using the debt/salary calculator at MappingYourFuture.org.
During School
- Monitor your needs. Last semester, did you have more than enough loan funds or were you struggling to get by? To keep debt levels manageable, monitor your needs and adjust your borrowing accordingly. Decide each time to borrow only what you need for school. Remember to maximize free money before taking out a student loan, and exhaust your federal loan options before considering private or alternative loans.
- Keep seeking free money. Grants and scholarships aren’t only for freshmen. Talk to your financial aid office or use resources like UCanGo2.org or Fastweb.com to locate grants and scholarships that you might qualify for.
- Pay interest payments. If given the option to pay the interest accrued on unsubsidized loans during your college career, do it. Quarterly interest payments are usually affordable, even on a tight budget, and can save you hundreds over the life of your loan.
After Graduation
- Plan for payments. Adjust your budget to include your monthly student loan payment before your grace period ends. Consider your spending habits and priorities and make changes, if needed. For example, you may need to postpone buying a new car to make room for your student loan payment. Also, get real about how much you owe and use OKMM's Loan Calculator to help you prepare to manage your debt.
- Commit to repayment. 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.
- Always pay 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.
- Communicate with your loan servicer. Notify your servicer of any changes in your name, address or ability to repay. There are a variety of ways your loan servicer can help if you’re having trouble making your payment, but you have to stay in contact.
- Revamp your repayment. The right payment plan makes successful loan repayment easier. Explore repayment plans at StudentAid.gov to choose the one that’s right for your situation. Bear in mind that flexible repayment programs, like deferment and forbearance, aren’t automatic; if you need help, you have to ask for it.
- Keep important documents. Create a “my student loan” file to hold statements, notices and other important loan documents.
