Student Loans - Oklahoma Money Matters

A student loan is the first experience with credit management for many students. To protect your credit history, you must take proactive steps to successfully repay your student loan. Below are student loan guidelines to consider before borrowing, during school and after school, and when entering repayment.

Before

Always go for free money first

When paying for school, take advantage of all grants, scholarships and college savings available to you before taking out a student loan. If you must borrow to pay for school, borrow only what you need for educational expenses. If you are considering a "private" (sometimes called "alternative") loan, do your research. Some private loans may have higher interest rates and fewer flexible repayment options, but many are becoming much more competitive.

Borrow only what you'll need

When accepting a student loan, know how much money you'll actually need to cover your school expenses, which include your basic living expenses for the school term. Many students are offered more loan funds from outside sources than they actually need. Be cautious in pursuing additional loans outside of those offered by your financial aid office. Ask the financial aid counselor for advice if you're considering taking a "private" student loan in addition to those that have been offered by the financial aid office. Since loans must be repaid, it's best to borrow only what you need to pay for school.

Be salary savvy

When it comes to student loans, a good rule of thumb is to make sure your total amount borrowed is less than your expected annual salary, and some experts recommend that the monthly loan payment should be no more than 8% of expected monthly income after graduation. Information about average starting salaries in Oklahoma is available at www.oesc.ok.gov, and you can estimate monthly loan payment amounts using the loan calculator at www.readysetrepay.org.

Know your dough

Visit www.readysetrepay.org, to learn more about making smart student loan borrowing decisions.

During

Monitor your needs

Last semester, did you find yourself with excess loan funds or were you struggling to get by? Monitor your needs and adjust your borrowing accordingly. Decide each time to borrow only what you need for school. Remember to always go for scholarships and grants before taking out a student loan.

Keep seeking free money

Grants and scholarships aren't only for freshmen. Eligibility requirements for scholarship programs change, and new programs are added every year! Talk to your scholarship office or use a scholarship search engine like www.fastweb.com or the scholarship databases like www.UCanGo2.org or https://secure.okcollegestart.org/Financial_Aid_Planning/_default.aspx.

Take interest in paying your interest

If given the option to pay the interest accrued on unsubsidized loans during your college career, do so. These quarterly payments are usually affordable on a tight budget and can save you hundreds over the life of your loan!

After

Ponder payments

Start thinking about repayment before it begins. Make sure you adapt your budget to include your monthly student loan payment before your grace period ends. Consider your spending habits and priorities; are changes needed? For example, you may need to delay buying a new car to make room for your student loan payment. Also, be sure to select the best repayment method for you.

Don't nix the fixed

Recognize that 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.

Pay your dime 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.

Talk it up

Communicate with your loan servicer regularly. Remember to notify your servicer of any changes in your name, address or ability to repay. There are a variety of ways they can help if you're having trouble making your payment, but you have to stay in contact.

Revamp your repayment

Consider alternate repayment plans that are available to address borrower needs. For example, if you need more flexibility due to economic hardship, unemployment or other unforeseen circumstances, or you just can't make your payment, there are several options to help you keep your account current. Bear in mind that flexible repayment programs, like deferment and forbearance, aren't automatic; if you need help, you have to ask for it.

Don't dump important documents

Keep copies of all loan correspondence. Create a "my student loan" file to hold statements, notices, and other important loan documents.

Additional Resources

• Ready Set Repay: Loan Calculator

The Teacher Education Assistance for College and Higher Education (TEACH) Grant program provides up to $4,000 per year for students who intend to teach in a public or private school that serves low-income families. In exchange for receiving a TEACH grant, the student agrees to teach full-time in a high-need field for at least four academic years within eight calendar years of completing the program of study for which the TEACH grant was awarded. If this obligation isn't met, all grant funds awarded will revert to a Federal Direct Unsubsidized Student Loan. Interest will be charged from the day the grant was disbursed and the student will make payments to the U.S. Department of Education. TEACH Grant eligibility requirements are outlined on the Federal Student Aid website. The site also provides a list of designated low-income schools.

Teacher Loan Forgiveness

Teachers with Federal Direct Loans or Federal Family Education Loans who meet certain eligibility requirements may qualify to have all or part of their student loan debt repaid through the Teacher Loan Forgiveness Program. Depending on the loan disbursement date, years of teaching service and subject area taught, a fully eligible teacher may qualify for up to $17,500 in loan forgiveness.

Among other requirements, a qualified teacher must be a "new borrower" on or after October 1, 1998 and must teach full-time for five consecutive, complete years in a designated low-income school. Visit https://www.readysetrepay.org/repaying/discharge_forgiveness.html#tlf to learn more about teacher loan forgiveness and determine your eligibility status.

Additional Resources

• Teacher Loan Forgiveness Eligibility Checklist (pdf)
• Designated Low-Income Schools List
• Teacher Loan Forgiveness Application (pdf)
• U.S. Department of Education