8 tips for managing your student loans

By Joel Delgado ’12, MS ’17

According to U.S. News & World Report’s 2015 edition of Best Colleges, the average amount of debt carried by FIU’s class of 2013 was $17,893, which is below the national average student debt for public university graduates ($25,550).

In fact, FIU is the top Florida school in this category and is ranked number 13 among institutions whose students graduate with the least debt load.

Related: FIU student loan default rate drops to 8.9 percent

Still, the decision to take out student loans and then manage them can often be a stressful and complicated process.

“The two biggest things when it comes to student loans are financial literacy and financial planning,” says Default Prevention Coordinator Gabriela Mendez, who helps students understand their student loans and plan for repayment. “It is a matter of being informed. You should never take out a loan when you don’t have a plan or know how it works.”

Here are some tips that will help you when it comes to dealing with your student loans:

Before you take out a loan…

KNOW THE DIFFERENCE BETWEEN LOANS

Not all loans are created equal. There are many different kinds of loans, which you can browse through at the OneStop Enrollment Services website, but this article focuses on the three basic types of federal direct loans:

• Subsidized loans: These loans are designed for undergraduate students with a demonstrated financial need. No interest is charged on these loans while you are still in school at least on a part-time basis, during a six-month grace period after graduation and during deferment periods (more on that below).

• Unsubsidized loans: Undergraduate, graduate and professional-degree seeking students can all apply for these loans, which are not based on financial need. But interest is charged during all periods of your loan – even while you are still in school.

• Parent PLUS loans: These are unsubsidized loans, but for the parents of dependent students. Interest is charged during all periods and borrowers must not have a bad credit history.

All first-time borrowers are required to complete entrance counseling, which informs you of basic loan information including repayment plans (more on that below), Master Promissory Note (MPN) information and how interest rates are determined.

MEET WITH THE DEFAULT PREVENTION TEAM

Set up a meeting with someone on the Default Prevention Team. They are there to make sure you understand which loans, if any, are right for you and to help design a plan that will get you on track for repaying them after you graduate.

Send an email to defmgmt@fiu.edu to meet with someone from the team.

LOOK FOR ALTERNATIVES

Taking out a student loan should be seen as a last resort after exhausting all other options. Look for scholarships you may qualify for, seek part-time work or apply for the Federal Work-Study (FWS) Program at FIU. If you can commute, save on housing by staying at home or split rent with a reliable roommate.

Get creative and look for other ways to generate income in order to cover your expenses and save money so that you can limit the amount you borrow – or eliminate the need to take out loans all together.

BORROW CONSERVATIVELY

If you decide you still need student loans, only borrow an amount that will cover school-related expenses such as tuition, housing and textbooks. Look for other ways to pay for that daily cup of coffee or the new pair of shoes you’ve had your eyes on.

“One mistake students often make is they take out more than they really need,” Mendez says. “Student loans shouldn’t be taken out for personal expenses.”

Related: 4 things students can do to improve their finances right now

After you take out a loan…

KNOW WHAT YOU OWE (AND TO WHOM)

It’s important to have a clear picture of how much money you have borrowed in student loans and which company (or companies) is your servicer. Servicers handle the billing and other services on your federal student loan.

NSLDS.ed.gov shows you how much you have borrowed and your servicer information. Make sure you sign up with your servicer(s), create a profile and track your repayments and life of their loans. Don’t keep yourself in the dark about where you stand in terms of your student debt.

STAY ON TOP OF YOUR ACCOUNTS

Once you create a profile, don’t simply neglect it. Make sure your information is up to date and that you are staying current on your payments if you have already started paying off your loans.

CHOOSE A REPAYMENT PLAN THAT WORKS FOR YOU

Once you are prepared to graduate, you will go through exit counseling that will help you choose a repayment option that works for you. There are a number of different options available for recent graduates that are based on income and other factors. To look at all your repayment options, check out StaffordLoan.com’s page on repayment options.

If you are unemployed, facing a dire financial situation or going back to school, you may qualify for student loan payment relief options such as deferment or forbearance.

ALREADY DEFAULTED? DON’T PANIC

If you have already defaulted on your student loans, hope is not lost. There are two big ways to resolve your default and get back on track. The best option, according to Mendez, is loan rehabilitation.

The first step is to make nine, voluntary, on-time payments within a 10-month period. Afterward, your loan will be placed back in repayment and you will be required to make regular payments until it is paid in full.

The more you know and the less you borrow now, the less time you will have to worry about paying off your student loans later. And that will free you up to thrive financially long after you take your last course at FIU.

If you have questions about your student loans or want to set up an appointment with the Default Prevention Team, send an email to defmgmt@fiu.edu. This article is part of our Secrets to Success series.