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What You Really Need to Know About Managing Your Student Loans Before, During and After College

Managing your student loans just got a little easier. 
What To Know About Managing Your College Student Loans Before, During and After College
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By Ni’Kesia Pannell ·

Heading off to college can be an exciting time in every young person’s life. What’s not so exciting though is the financial obligation that comes along with it. While taking out student loans to assist with paying for your education may seem like the best option for getting through school, being knowledgable about how to manage them is even better. Here are what a few experts had to say about managing your loans before, during, and after college so that you don’t end up with regrets:

Before College

Being prepared for college includes knowing your financial options, too. Don’t get tricked into thinking that taking out a massive loan is your only option for education.

Do your research.  Research student loan options — from both private and public sources  — and figure out which type suits your needs based on the length of your academic program, the cost of the program and where you are at financially (i.e. how much you need). Also look for grants and scholarships that can be used to offset the cost of your education. I know one student who applied for and won over $500,000 worth of scholarships – she actually didn’t end up using student loans after all. Some loans are tied to grants but require separate applications make sure to apply for both. For minorities and women of color, there are quite a few programs that offer financial assistance — make use of all of these programs. — Keisha Blair, Economist and Personal Finance Expert

Borrow only what you need.
This means exhaust free aid first (grants, scholarships, Federal Work Study) or find a part-time job off campus if you can juggle coursework with a few hours of a side hustle to help reduce your loan indebtedness. Also, as a general rule, you should borrow less than you expect to earn in your starting salary. This will ensure you can repay your debt within 10 years. — Anita Thomas, Senior Vice President of Edvisors
 
Become best friends with your financial aid office. 
If you determine that you will need additional aid in the form of loans for college, speak with your financial aid office first. There may be other funding options available for you, opportunities to work on campus, or offerings specific to that school that may allow you to take on less debt. Your financial aid office is there to help you. —Marshay Clarke, Financial Expert at Betterment
 
Maximize Federal Student Loans
After scholarships and grants, you should maximize your federal student loans before borrowing private student loans. Federal student loans provide several borrower benefits. For example, with federal student loans, you have access to flexible student loan repayment programs as well as options for deferment and forbearance based on your financial situation. That said, some private student loans lenders now offer undergraduate and graduate student loans, including parent loans, at interest rates that are commensurate with the interest rates offered by the federal government.”— Zack Friedman, Founder & CEO of Make Lemonade

During College

One of the most critical times that you should be paying attention to your student loan activity is during college. Contrary to popular belief, it’s more important at this phase to understand the financial decisions you’re making than it is post graduation.

Know what you’ve borrowed and who you’ve borrowed it from.

Keep track of each and every single loan that you obtain. Whether it’s a federal loan or a private loan (hint: try to use these as a last resort), start a file to capture the amount you borrowed, the interest rate, the type of loan, and a copy of the promissory note. This is easily accomplished through digital record keeping. In most cases, loans are signed electronically so be sure to download PDF copies of the loan documents you complete as these will contain all the legal language you agreed to; including your rights as a borrower. If there is ever confusion in the future about how much you originally borrowed and how much you will be expected to repay after you graduate, you can always go back to your original source documents. Create a folder on your laptop and password-protect your documents. There is sensitive information in these files, after all. — Anita Thomas
 
Understand your financial decisions. 
 
It is critical to understand the true cost of your financial decisions now so there are no surprises later. It’s never too early to estimate the cost of your student loan debt. With a free online student loan payment calculator, you can calculate your monthly and total student loan payment, including interest. You can enter the total amount of debt that you anticipate at graduation and see how much you can expect to pay each month. — Zack Friedman
 
Always keep your eye open for extras. 
 
While in college, keep an eye out for bursaries — these are micro-grants that are offered to students under various circumstances but can add up to help offset your cost of living. Be sure to continue to monitor your credit score and student loans, too. — Keisha Blair
 
Don’t fall into the refund check trap.
 
When you receive an amount in loans that is greater than your tuition costs, you will receive a “refund check” in the mail. This is not free money! It is additional money from your loan that you will be paying back, with interest, upon graduation. Far too often I saw students use the refund check as free money, and now they are stuck with paying a large amount in loans and interest. Use this check very wisely. The best thing to do is to give the check back to your loan department to lower your financial aid package. If you cash the check, use only what is necessary to help you meet your basic living needs and any extra expenses that may arise. — Marshay Clarke

After College

Finding relief in your finances after college doesn’t have to be a myth — even if you have student loans. Get to know your money and be open to taking different paths to repayment.

Create a budget.  Whether you use a simple spreadsheet, or a more sophisticated tool like Mint.com, Quicken, or YouNeedABudget.com, get a grip on what your actual take-home pay will be against your expenditures, which will obviously include your student loan. This is reality check time. Will you need to consider federal loan consolidation or a student loan refinance to better manage your debt and put breathing room in your budget? Should you consider an income-driven repayment plan to help? Or depending on your career and employer, will you qualify for loan forgiveness? If you’re one of the lucky ones, you’ll still need to understand how much of your debt will realistically be forgiven—and when. This means you’ll still have to make a certain number of qualifying payments before the forgiveness even kicks in (i.e. you’ll need a budget WELL before you can say goodbye to those loan payments). — Anita Thomas

Develop a repayment action plan. With a repayment action plan in place, you will know what to expect when that first student loan invoice comes due. The important action step is to understand the true cost of your student loans, and how interest accrues. Then, you can evaluate the various options available to student loan borrowers such as student loan refinancing, federal student loan consolidation, federal student loan income-driven repayment plans, teacher-student loan forgiveness and public service loan forgiveness. — Zack Friedman

Consider refinancing your loans if it makes sense.  The amazing thing about today’s market is there are a number of companies that allow you to refinance student loans with high rates. If you meet certain qualifications, you can change rates on a loan that was once charging 8% in interest to be 3%. — Marshay Clarke

Approach your debt payoff like a budding entrepreneur. If family and friends offer you gifts for your birthday or graduation set up a bank account and tell them you’d prefer if their gift helped you pay down your student loans. Shortly after his graduation from college and after he proposed to his future wife, one of my personal mentors (and CEO of a NYC firm) got sponsors for his wedding! Approaching your debt pay-down like an entrepreneur will set you on a path to long-term success. — Keisha Blair  

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