Debt Management and Minimization
Many students seek a postsecondary education hoping to improve their career opportunities and financial future. Managing your money while in school is an important part of obtaining the lifestyle you want. However, poor money management, both while in school and after, can mean a large salary going towards debt and not much else.
Follow these steps to make getting your degree, minimizing your debt and repaying your student loans as easy as possible.
For those just beginning a postsecondary program:
- Identify your expected after-graduation salary by visiting sites like www.salary.com, as well as job finding services, like www.monster.com or jobs.mo.gov, to determine the demand and compensation for your profession.
- Determine how much the degree you want will cost and if you can afford it.
- Research and compare the total costs for each postsecondary institution you are interested in, including course fees, add-on fees (student health fees, recreation fees, etc.), room and board, etc. The national College Navigator website provides comprehensive cost and program information as well as links to each schools’ net price calculator. The U.S. Department of Education also publishes College Scorecards on postsecondary institutions to help you make an informed decision about which program, degree, or college in which to invest your time and money.
- Use online calculators, such as the calculator on Mapping Your Future to determine how much student loan debt you can afford (based on your expected future salary) or what salary you will need to pay your student loan debt. A general rule of thumb is to keep student loan payments to 8% of your income.
- Develop and follow a budget while getting your degree so you can avoid credit card and other types of debt.
- Try to find sources of free funding, such as Pell Grants and scholarships, before borrowing student loans. It is also a good idea to pay for a portion of your college expenses as you go through part-time employment.
Those with a degree or about to graduate should be aware of student loan repayment options. Once you have borrowed a student loan, use the National Student Loan Data System (NSLDS) to access your student loan account and keep track of your total debt. You may also get the information by calling (800) 4-FED-AID.
8 percent rule
Most financial advisors recommend student loan payments not exceed 8% of your monthly gross income. Multiply your estimated gross income (before taxes and other withholdings) by .08. Your student loan payments should not exceed this amount.
Use our online calculators to see how your financial choices can affect your bottom line.
Doing a budget for the first time can be confusing. The budget calculator on YouCanDealWithIt.com helps simplify the process.
Find out how much, and how often, you need to save to meet a specific financial goal.
Get an estimate of how your savings will grow over time.
See how different interest rates and loan terms can affect your monthly payment.
If you are having financial difficulties…
Because there are serious consequences for falling behind on your payments, contact your loan servicer immediately. They can help you develop a plan to bring your loan current again.
Repaying your student loans
Sallie Mae is committed to giving you the information and tools you need to understand and evaluate your student loan payment options. We can help you find an option that fits your budget, simplifies payment, and minimizes your total interest cost.
Before you choose a repayment plan
- Understand the repayment options available to you. Sallie Mae offers standard, graduated, income-sensitive, income-based and extended repayment plans on federal student loans.
- Realize that combined billing is available for Sallie Mae-serviced loans.*
- Compare your repayment options. Estimate your monthly student loan payments for eligible Sallie Mae loans with our Loan Repayment Calculator. Or, if your loans are in repayment, you can view repayment plans that may be available for your loans at Manage Your Loans
- Know that you can prepay your loans in part or in full at any time without penalty. This will lower the overall cost of your loan.
- Realize the importance of paying back your student loans.
- Understand that choosing a plan with lower payments may result in higher costs over the life of the loan.
Lower monthly payments
Payment amount reduction may be available for those who qualify. Federal student loan repayment plans offering lower monthly payment amounts than the standard repayment plan are:
- Extended repayment
- Graduated repayment
- Income-sensitive repayment
- Income-driven repayment (e.g., income-based, Pay As You Earn, income-contingent)
Lowest overall loan cost
Make level monthly payments of principal and interest to help control interest costs.
Postpone your payments
Private student loans
Eligibility for Sallie Mae private student loan repayment plans may vary by loan type, loan balance, and disbursement date.
The Sallie Mae Smart Option Student LoanSM first disbursed June 1, 2009 and later requires monthly interest-only payments during the in-school and separation periods. Check the terms of your loan’s specific Promissory Note and log in to Manage Your Loans to see if your loan status shows repayment. If so, and you are enrolled in school, then you are not eligible for other repayment options at this time.
Private student loans first disbursed before June 1, 2009, may be eligible for graduated repayment to lower the initial monthly loan payments.
*Combined billing is available for eligible student loans that are serviced by Sallie Mae. Some restrictions may apply.
Here’s a Monthly Budget that might help with wise spending.
Spending and Savings Plans
Creating and sticking to a spending and savings plan might not be your idea of fun, but it can help you control your spending so you CAN have fun without getting into money trouble. If you don’t have much money coming in, don’t worry—following a realistic plan CAN still allow you to have some small luxuries, even if it is an occasional soda or movie.
- The first step towards creating a budget is determining all of your recurring monthly expenses, such as rent, tuition, groceries, phone bill, student loan payment, car payment, gas, insurance, necessary clothes, and other needs. You may wish to check out the MDHE’s spending and savings plan worksheet to help get you started.
- Next total your monthly income including wages from work (not including overtime) and any financial aid funds left over for living expenses after paying your tuition and fees. Calculate the amount of these financial aid funds you should use each month by dividing the amount by the number of months in your semester or term.
- Then, take your overall expenses total and subtract expenses from your income. There may not be anything left over, or it could be a negative number. Based on the results, examine each item in your budget and decide if you could cut back in any areas. Which line items are truly NEEDS and which are actually only the things you WANT? Additionally, if you are paying checking account or credit card fees, learn how to effectively take charge of your finances while to eliminate these expenses.
Congratulations, you’ve created a budget and taken the first step to getting control of your money.
Now for the tough part—
- Find out if your actual spending matches your plan. Tracking expenses and comparing them to your plan will allow you to gain control over your monthly spending, allowing you to keep student loan debt, as well as other types of debt, at a reasonable level or non-existent, especially while you are in college.
There are a number of ways to track your spending, such as writing down purchases in a checkbook ledger or using a spreadsheet. If you are comfortable letting technology do some of the work for you, you can use an application like www.mint.com or www.buxfer.com, which can help you track and analyze your spending habits.
If you follow these steps, you should be able to gain control over your money, save money for emergencies, and get out of debt quickly.
- Planning & Budgeting Calculator
- Income-Based Repayment Calculator
- Income-Contingent Repayment Plan Calculator
- Cost of Deferment/Forbearance Calculator
Use our calculators to plan your household budget, determine your monthly payment amount, and explore deferment and forbearance options to postpone your payments.
How much money will you spend on books? What about food, rent, and utilities during college? Use the Planning and Budgeting Calculator to see how your expenses add up so you can best estimate how much you may need in additional income or student loans to cover your costs. Remember, only take out the amount in loans that you need—your financial future will thank you. Calculate your college expenses.
Want a payment based on your income, family size, and interest rate? This plan takes these factors into consideration, potentially allowing you more flexibility in your monthly budget. Learn more about this plan. Calculate your payments on this plan.
You may not be able to make monthly payments right now—and that’s okay. The federal government allows for many different deferments and forbearances that could postpone your payment, and one may be perfect for your unique situation. Learn more about deferment and forbearance options. Calculate interest that will accrue during a deferment or forbearance.
The Path to Repayment
As you leave school, understanding how your student loans will impact your finances can help you successfully manage your loans.
This timeline teaches you about what happens during your grace period and the steps to take along the path to repayment.
Great Lakes is your federal student loan servicer. That means we’ll be your advisor as you repay your loans. The idea of making loan payments might be a little overwhelming, but you have time to get ready. Federal student loans come with a six month grace period. It’s a window of time after you leave school when you aren’t yet required to make payments. Now is a good time to start thinking ahead a few months to prepare for that first payment.
Your grace period is about half over. It’s a good time to estimate your monthly payment amount and review all of your repayment options.
- Making on-time payments builds good credit, which can be a factor when applying for a job, securing housing, or buying a car.
- Log in and select Repayment Plans from the Quick Links for level and graduated plan estimates. Other repayment plans are also available—some based on how much you’re able to pay.
- Plan ahead for trouble. Special repayment options may let you postpone payments.
It’s time to decide how you want to pay back your student loans. You determine whether you begin making full payments or pursue an income-based plan that could possibly lower your payments to $0.
- Log in and select Repayment Plans from the Quick Links for level and graduated plan estimates. Or view income-based options.
- Unless you select an option, we’ll set you up with the level repayment plan. It consists of monthly payments that stay the same over a maximum of 10 years.
- If you’re unable to start repaying your loan, take action now! Don’t wait. Select Postpone or Lower Payments to explore postponing your payments with deferment or forbearance.
Your six month grace period has ended and you’re about a month away from your first payment due date. You’ll soon get a payment schedule from us that details your repayment terms. If your grace period flew by and you didn’t select a different repayment option, we set you up with the level repayment plan. It consists of monthly payments that stay the same over a maximum of 10 years.
This is a good time to make sure we have your current contact information and to sign up for automatic monthly payments.
- Make sure we have your active email address. As you move on, you may be done using your school email address. Log in and select Edit Your Profile to update your contact information.
- Ensure your payments are always on time by enrolling in Auto Pay to have your monthly payments automatically withdrawn from your checking or savings account. Your lender might also offer an incentive for making automatic payments. Select Auto Pay from the Payments menu.
You’ll be making your first scheduled payment in a couple weeks. If we have your current email address, we’ll send you monthly payment reminders, including the payment amount and due date. Otherwise, we’ll mail you a payment reminder letter each month.
Your first scheduled student loan payment is due, but the path doesn’t end here. Successfully repaying your student loans helps you build a solid financial future and Great Lakes will be here to help you every step of the way.
- Log in and select Payments to review your payment options.
- Learn solid money management skills with Financial IQ®.
- We realize things in life can change. If they do, you can also change your repayment option. Log in and select Repayment Plans from the Quick Links.
- Contact Us with questions or concerns, any time.
Depending on the type of loan you have, interest can build up (accrue) while you prepare for repayment. If you’re wondering how this will affect your loan
Remember those loans you took out to help pay for school? The six months of your grace period gave you the time you need to make sure you know how many Federal Stafford Loans you have, what your monthly payment amount will be, where to mail your payment, and when to start paying the loans back.
For loans serviced by Nelnet, you can view all of your loan details by logging in to Nelnet.com. We’ll also send your monthly student loan billing statement around three weeks before your payment is due.
What to Do and Expect While You’re In Grace
- Log in to Nelnet.com to update your contact information, see your due dates and payment amounts, and view other loan details.
- About halfway through grace, when you log in to Nelnet.com, the Payment Schedule for your student loans with Nelnet will be available in the left hand navigation under Payment Schedule.
- Explore your repayment plan options—if you don’t choose a specific repayment plan during your grace period, your loans will be on the Standard Repayment Plan, but you can change your repayment plan to better fit your budget at any time.
- See if you have loans with other servicers at nslds.ed.gov. You’ll need your PIN.
- Review your Nelnet student loan billing statement. It arrives about three weeks before your first payment is due. You can choose to receive paper or eStatements by logging in to your account at Nelnet.com. See a sample Nelnet statement.
Things to Keep in Mind While in Grace
Special Considerations for PLUS and GradPLUS Loans
For Federal GradPLUS Loans for graduate and professionals students, your payments are postponed until six months after you graduate or drop below half-time status as a student. This postponement is called a six-month deferment, not a grace period.
Federal PLUS Loans for parents don’t have a grace period, and you’ll begin making payments approximately 60 days after the school(s) receives all of the loan funds. However, you can postpone payments while you or your student is in school—but the loan will continue to accrue interest. If you haven’t yet pursued this option, you can request this postponement (called a Parent PLUS Borrower Deferment) directly from us by calling 888.486.4722.
For both of these loan types, we’ll send your monthly student loan billing statement around three weeks before your payment is due. When you start making payments, your loan is considered to be in repayment.
Please log in to Nelnet.com to view when payments are due for these and any other kind of federal student loans that are serviced by Nelnet.
Get Ahead on Payments
Some borrowers choose to start making payments before their grace period ends. You will save money if you make payments on your student loans while in grace—this will lower your overall balance and maybe even shorten your loan term.
Consolidation, Repayment Plans, and Options to Postpone Payments
If you have federal student loans through multiple lenders, consider consolidating them into one loan so that you only have one monthly payment rather than multiple.
Nelnet also offers various repayment plans that could potentially spread your payments over a longer period of time or lower them based on various criteria.
If you don’t think you’ll be able to start repaying your loans, consider deferment or forbearance.
If you’ve been called to active duty military service, you may qualify for a grace period of up to three years. If you return to school following the military service, you may qualify for additional grace time as well. If you’re unsure whether you are in your grace period or repayment, contact us