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September 03, 2010
Check in With Your Student Loans
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September is a good time to check in with your student loans—whether you’re still in school or not.
First-Time Borrowers
First-time student loan borrowers may be overwhelmed by the loan process. Student loans are not something you want to take lightly, but keeping a few key steps in mind can simplify the process:
- Get your student loan money and use the funds wisely. Different schools have different criteria in terms of what’s covered under their cost of attendance (COA). Make sure you are aware of which expenses may be covered by your loans and which you’ll have to cover out of pocket.
- Check on your loans. Applying for and accepting financial aid aren’t the only steps you’ll have to take to secure your loan funds. Check with your school to find out when your loans will be disbursed so that you can avoid any tuition late fees.
- Be aware of your school’s add/drop period. Dropping classes can affect the amount of financial aid you receive. Make sure you’re familiar with your school’s add/drop policy.
Student Loan Borrowers Still in School
If you’re a student loan borrower who is still in school, you might want to consider paying the interest on any unsubsidized loans you have. An unsubsidized loan is one that accrues interest while you’re in school.
Under a standard, 10-year repayment schedule, a $6,000 Stafford loan will require a payment of about $70 per month if you pay the interest during the 4 years you are in school. If you do not pay the interest, your balance will keep increasing. So, after the 4 years, approximately $1,600 of interest will be added to your principal balance via capitalization.
This would make the required payment about $90 each month for 10 years—meaning you would have to pay back an extra $2,200 (the $1,600 in interest that accrued over the first 4 years plus about $600 more that would accrue on the higher balance throughout the 10 years of repayment).
Finding Your Loan Information
If you are a student loan borrower who isn’t in school, you should start thinking about loan repayment. If you aren’t sure about your loan status (how many you have, who holds them, what their status is), an excellent place to begin is the National Student Loan Data System for Students (NSLDS).
NSLDS is the U.S. Department of Education’s (ED) central database for federal student aid records. It tracks your loans from the time you apply until you complete repayment. NSLDS allows you to see details about all your federal student loans (private loans are not in NSLDS) and is an excellent resource for keeping tabs on your loans.
