Whether you are still deciding on college, taking out your first loans or are already in repayment, there is a lot to know about borrowing and repaying student loans. The volume of information can be overwhelming, so we've boiled it down to the nine facts that you need to know to manage your student debt. Think of this as the Cliffs Notes version of Equal Justice Works' free e-book, Take Control of Your Future: A Guide to Managing Your Student Debt.
- There are big differences between private and federal loans. Most private loans offer variable interest rates that may start low, but can -- and likely will -- increase. Also, commercial or private loans are never eligible for federal relief programs. Federal loans, on the other hand, qualify for federal relief programs and come with borrower protections such as fixed interest rates and deferment and forbearance in times of hardship.
- When looking for schools, utilize the U.S. Department of Education's College Affordability and Transparency Center. The College Affordability and Transparency Center contains information on tuition, fees and links to colleges' net price calculators to help you estimate what you will really pay for college. You might be surprised -- with grants and scholarships, some colleges and universities with big names and higher tuition might be cheaper for you than seemingly lower priced ones.
- Fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is required to secure access to federal student aid (this includes federal grants in addition to federal loans). Many states and institutions also use information from the FAFSA to determine eligibility for their different grant and loan programs. If you don't fill it out you will lose the opportunity to receive this assistance.
- Always look for grants and scholarships to reduce the amount you have to borrow. Ask schools' financial aid offices for more information and use resources like FastWeb.com to find external scholarships and grants that may help you. Do this when you are applying or thinking about applying - don't wait until you are accepted.
- Take advantage of Federal Work-Study. The Federal Work-Study Program funds students to work on campus or in off-campus nonprofit agencies, allowing them to earn money to help pay for college. Find out if your prospective schools offer work-study funds and if those funds are restricted to on-campus work or whether they can be used with off-campus public interest organizations.
- Keep track of your loans. Don't be that person who is surprised by how much you have borrowed. Every federal loan you have borrowed, along with its repayment status, is entered into the National Student Loan Data System. Keep up on any private loans you have borrowed as well. This way you won't have sticker shock when you graduate - and it may help motivate you to reduce the amount you're borrowing.
- Understand how income-driven repayment plans work. Remember way back in point number one when we advised borrowing only federal loans? Among the borrower protections federal loans offer is access to income-driven repayment plans such as Income-Based Repayment (IBR) and Pay As You Earn. These plans can help by limiting the amount you pay each month on your student loans to an affordable percentage of your income.
- Interested in public service? Make sure you know about Public Service Loan Forgiveness. Public Service Loan Forgiveness (PSLF) allows borrowers who work full time in a wide range of public service jobs while repaying their loans to earn forgiveness on whatever remains on their federal loans after ten years. You have to do everything correctly to earn forgiveness, though. You can learn about all the requirements in one of our free student debt webinars.
- Loan Repayment Assistance Programs (LRAPs) can help with payments. If you're eligible, LRAPs provide funds toward your monthly payments. And you may be able to use those funds for your private student loans. Ask your employer, school, and even your professional association if they offer an LRAP. There are also LRAPs available from local and state governments and the federal government. Equal Justice Works has a list of many of the LRAPs available for lawyers.
If you want additional helpful and detailed information on these items and many more, download Take Control of Your Future, visit the educational debt section of Equal Justice Works' website, or sign up for a free student debt webinar.
Isaac Bowers is Associate Director for Law School Engagement & Advocacy at Equal Justice Works, overseeing the Student Debt, Student Engagement, and Law School Relations programs. He was previously responsible for the organization's educational debt relief initiatives. In that capacity, he wrote a weekly blog for U.S. News; conducted monthly webinars for a wide range of audiences; advised employers, law schools and professional organizations; and worked with Congress and the Department of Education on Federal legislation and regulations. Prior to joining Equal Justice Works, he was a Fellow at Shute, Mihaly & Weinberger LLP in San Francisco, where he represented citizen groups and local agencies in environmental litigation and land use and planning issues. Isaac received his J.D. from New York University School of Law.