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With College Come Financial Responsibilities
Jeff Mictabor
Between homework, tests, class schedules, a part-time job, and
the pressure to maintain acceptable grades, college thrusts
students into a world of increased responsibilities. And
financial responsibility, the one that could most affect you in
the long run, often gets lost in the crazy shuffle of your
college life.
Credit card companies bombard you with irresistible offers. Your
student loans seem to involve pages and pages of complicated
rules and restrictions. All you know is you don't need to pay
them off right now, while you're still in school.
Unfortunately, when you're not familiar with the
responsibilities that come with being a student loan borrower or
aware of the dangers and pitfalls of credit cards, you could end
up in over your head when repayment time does roll around.
To help keep you out of the financial doghouse, NextStudent, a
leading Phoenix-based education funding company, offers a few
simple rules to becoming and remaining a responsible
borrower.
Plan, Plan, Plan
At the beginning of every semester, sit down and budget out
every major and minor expense for the coming six months. Include
tuition, fees, room and board (or rent and utilities), books,
transportation to and from school, and living expenses like
meals and groceries. Use exact figures instead of estimates
whenever possible, and don't forget to leave yourself a hundred
dollars or so of spending money each month for unexpected
expenses and inexpensive entertainment like the occasional album
download or movie out.
Once you have all your expenses down, figure out how much money
you'll have coming in from scholarships, grants, work-study or a
part-time job. Apply your incoming money toward your expenses.
Whatever expenses you have left over are what you'll need to
cover.
Research Your Student Loan Options
Federal
>student loans offer low-cost, low-interest ways of
financing your education, and should be the first place you look
when you still have school costs to pay.
Federal Stafford Loans are available without a credit
check to both undergraduate and graduate students and feature a
fixed 6.8% rate.
Federal PLUS and Grad PLUS Loans are credit-based
loans available to graduate students and parents of dependent
undergraduates at a fixed 8.5% rate.
These federal student loans carry no application fees, no
prepayment penalties, and student borrowers can postpone making
payments as long as they're enrolled at least half time.
If, even after scholarships and federal financial aid, you still
have school-related expenses to cover, a private student loan
could make up the difference. NextStudent
>Private Student Loans are available year-round, so you can
apply at any time throughout the year, and there's no cost to
apply. Federal student loans typically offer more attractive
terms than private student loans, so always take advantage of
your federal student loan options before turning to private
student loans.
Ask the Money Questions
Whichever student loans you're considering, make sure you get
all the information you'll need to decide which type of student
loan is best for you and your financial situation:
- What are the eligibility requirements? Will you need a
co-signer? - What's the interest rate? Is it a fixed rate
or variable? - Are there any application fees,
origination fees, guarantee fees, administrative fees or
processing fees?
Can you defer making payments while you're still in school at least half-time?
Do you have deferment and forbearance options once you've left school?
How long do you have to repay? What kinds of repayment plans
and options are available?
Keep the Credit Cards Under Control
Don't get conned by slick advertising and "free" or
"zero-interest" offers--there's almost always a catch, and that
catch can involve interest rates of 20% or more.
Here are the basic rules that'll keep you from digging yourself
into a pit of credit card debt: Use your credit cards for
emergencies only, or for small regular purchases like gas for
your car, when you don't have $40 in cash on you.Don't spend
more than you have. If it's not in your budget and you can't pay
for it with your spending money allowance, don't buy it. Want
that new iPod that costs more than your monthly entertainment
budget? Save up a few months' spending money, and keep it off
the card.
Remember that credit cards aren't like your
put off making payments just because you're still in school, and
if you're experiencing financial difficulties or having trouble
making your monthly payments, a credit card doesn't come with
deferment or forbearance options that allow you to temporarily
postpone making payments.
Don't Shirk Your Repayment Responsibilities
Here at NextStudent, we know that life can throw you a few
curveballs. We also know that money isn't always easy to come
by. As a student lender we understand that if you're having
trouble making your monthly payments, you might be embarrassed
or just not want to deal with it. But, for the sake of your
credit score, it's absolutely imperative that you communicate
with your lenders if you find yourself unemployed or going
through a period of financial difficulty.
Federal student loans offer extended, income-sensitive and
graduated repayment plans that could lower your monthly payment
and help make repayment more affordable. You also have deferment
and forbearance options in case you need to temporarily postpone
making payments altogether. If you have
without these federal benefits, you may still be able to work
out a workable payment plan with your lender.
The main thing is to contact your lender. Most lenders will want
to work with you. Don't just stop making payments, waiting for
your situation to get better. After enough missed consecutive
payments, your student loans could go into default. If you
default on a federal student loan, the government can decide to
garnish your wages. Having a defaulted student loan could also
keep you from being able to take out most other kinds of loans,
whether you're looking to finance a new car, a house or another
semester at school.
Consolidate Your Student Loans
Once you've left school or dropped below half-time enrollment, a
Federal
n_loans.asp">student loan consolidation allows you to bundle
all your eligible federal student loans into one easy-to-manage
loan with a fixed interest rate. By consolidating your student
loans, you could cut your payments nearly in half and get up to
20 more years to repay.
With no credit check, no fees and no cost to apply, a student
consolidation loan is one of the smartest moves a responsible
student loan borrower can make.
NextStudent believes that getting an education is the best
investment you can make, and we're dedicated to helping you
pursue your education dreams by making college funding simple.
Learn more about Student Loans, Private Student Loans and
Consolidation at NextStudent.com.
About the author:
Jeff Mictabor is an enthusiast on the topic of student loan
issues in the news. He has been writing for the past 10 years
for a variety of education publications. He now offers his
writing services on a freelance basis.
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