Student Loan Tips, or
What You Really Need to Know About Student Loans

Borrowing money to pay for college can be a rather stressful and confusing endeavor if you don’t have sufficient information and knowledge on the subject. Although WFI does not give direct advice pertaining to finances we want to give students
who are in any part of the loan process a few tips on ways they can more easily manage their loans.

Tip #1:Know what you are getting into, and whom you’re getting into it with. Many private banks and lenders, as well as the federal government, are in the student loan business, and while they offer the same general loans and services, their terms may differ. Use the resources below as well as the financial aid services at your college or university to understand fully the terms and conditions under which loans can be taken out as well as your chosen lender’s specific conditions. Do not hesitate to contact your office of financial aid with any questions or concerns you have.

Tip #2:Try not to take out a larger loan than is necessary to fund your college experience. Many times you can use work-study positions or apply for grants and scholarships as part of your financial aid package instead of relying solely on loans to pay for the part that you or your parents cannot directly pay for.

Tip #3:Keep track of what kind of loan you have, whom you’ve borrowed the money from, and how much it is for as well as the agreements you sign. Different loans have different minimum monthly payments, interest rates and repayment plans. Don’t just sign the promissory note and forget about it!

Tip #4:Comparison shop. Loans come in several varieties: subsidized, unsubsidized, some have much lower interest rates, some can be put off repaying until you are several years out of college, while others cannot. Make sure you look at all of your loan options and choose one that is most appropriate for your financial needs.

Tip #5:Remember that a loan is NOT free money—whether your loan is unsubsidized or subsidized, you will owe interest on the money. If for some reason your loan is too large for the amount needed to pay your tuition, you may receive a check for the overflow amount. If you decide to spend this check, don’t forget that it must be paid back with interest.

Tip #6:Remember that student loans must be repaid even if you do not finish school. When it comes time to repay your loans, you can set up a repayment plan that makes sense for you. Using financial calculators on the websites above may be helpful for determining which plan to choose.

Tip #7:You must start repaying your student loan six months (the “grace period”) after your official graduation date. If for some reason you have problems paying back your student loans, you can seek a hardship deferment of the loan until you’re able to pay back the money you owe. Your lender will have more information on specific procedures.

Tip #8:Understand what loan consolidation is and realize that it is not always beneficial for everyone. For advice and tips on how and when to consolidate your loans consult the websites below.

Online Resources

Smith College Financial Aid Office
http://www.smith.edu/finaid

• Guide to fees and payments including basic information on parent loans
• Financial aid application process for prospective and current students including application forms available online
• Student employment, job offers, payroll information and student employment guide
• Types of aid, information on institutional, federal and state aid, special section on outside aid
• Financing options, link to Massachusetts Educational Financing Authority (MEFA) and Federal Parent Loan to Undergraduates (PLUS)
• Student accounts, fees and payments

8 Student Loan Management: Tips and Tactics for the Life of Your Loans
http://www.princetonreview.com/grad/finance/articles/loans/access_tips.asp

College Compass
http://www.edonline.com/collegecompass/loans.htm#perkins
This website is a complete and detailed guide to student and parent higher education loans. Includes Stafford, Perkins, PLUS, and Federal Family Education Loans. Student can click on each one to view an extensive fact and explanation sheet that shows how much you can borrow, how your school gets the loan money, and when and how you repay loans. This website does not include information about private loans but includes resources in each state for state aid.

College Financing Basics
http://www.bankrate.com/brm/green/college/basics1-intro.asp
Tips on where to find the money to finance college and long-term and short-term financial planning.

FinancialAidForCollege.Com
http://www.financialaidforcollege.com/student-loans.html
This website is a brief fact sheet about student loans. It includes brief descriptions about the federal student loans as well as private loans and consolidation.

FSA Ombudsman Home Page
www.ombudsman.ed.gov/
If students have a problem with their student loans this site may be able to help them. This site provides students with a list of tips on how to learn more about your loans. Ombudsman gives advice on how to resolve problems on your own, and if you can’t, you can contact them with questions or concerns.

Kiplinger’s
www.findarticles.com/cf_dls/m1318/11_53/56952016/p1/article.jhtml
This article explains loan consolidation using a real life example of a student who has graduated college with $20, 000 of student loan debt. Authors discuss the benefits of loan consolidation as well as strategies for doing it. It also describes the advantages and disadvantages of other repayment plans such as graduated plans or extended terms.

The Project on Student Debt
http://projectonstudentdebt.org/
This website is good for researching information on student debt and loans. The website features initiatives dealing with student loans and the policies surrounding them. It offers publications dealing with student debt and many resources including sections on: recent data and research; advice to borrowers; a glossary of terms related to student debt and links to other sites. Information is also available in Spanish.

Schoolwork.org- Loan Consolidation
www.schoolwork.org/student-loan-consolidation.html
This website gives a quick overview of information concerning student loan consolidation. It briefly explains what consolidation is, what loans can be consolidated, and what kind of money it saves you. Clicking on “Student Loan Consolidation Online” takes you to a similar website which also contains a request form for a consolidation application.

The Smart Student Guide to Financial Aid
http://www.finaid.org/loans/
This site gives general information site on Stafford, Perkins, PLUS, and Private loans. It compares interest rates on these loans; it explains the difference between subsidized and unsubsidized loans. The site also includes a comparison of repayment plans. Several loan calculators can help borrowers figure out total amount that will be repaid, and how long repayment will take given certain monthly payments at certain interest rates.

Urgent assignment: Consolidate student loans
http://www.bankrate.com/brm/news/college/20050523a1.asp
Discusses the recent rise in student loan rates.

US Department of Education: Loan Consolidation
http://www.loanconsolidation.ed.gov/
Helps all borrowers (not just students) figure out if it’s a good time to consolidate. Students can click on the ”should I consolidate?” section to help analyze your interest rates, your monthly payments, comparing the current situation with consolidation possibilities. Describes the benefits of loan consolidation. Students can click on the eligibility section to see questions that help determine if you are able to consolidation. The site also has a calculator that can estimate your consolidated loan payments if you type in your current loans and their interest rates.

Young Money
http://www.youngmoney.com/financial_aid/student_loans
Links to articles about student loans. Young Money is sponsored by American Collegiate Financial Services.