Debt Management – Student Loan Basics

Before borrowing you should determine how much you can afford to borrow and how you are going to manage your loan debt once you begin repayment. It is recommended that you explore other financial aid options, such as external and internal scholarships, before borrowing. Determining a manageable debt level is based on two estimates:

• How much you will borrow
• How much you will earn once you complete school

A general rule states that your maximum student loan payment should not exceed 10% of your gross first year salary. Planning ahead will protect you from the serious consequences of defaulting on your loan payments. This results in detrimental effects on your credit rating for at least seven years, loss of repayment and deferment options, possible seizure of federal and state income tax refunds, referral to a collection agency, legal action and garnishment of wages. Plan your budget carefully and borrow only what you need. As your loan payments increase so will your loan balance.

Information on graduated and income-sensitive repayment options are available from your lender. These figures are estimates only; specific questions about loan repayment should be directed to your lender. If you do not know who your lender is you can visit nslds.ed.gov to find out.  Students with Federal Direct Loans questions should visit StudentAid.gov. Federal law requires the government to report loan information and the subsequent monthly payment information to credit bureaus. A borrower has the right to prohibit a credit bureau from using the information in the borrower’s credit record in connection with any credit or insurance transaction not initiated by the borrower. The borrower may exercise this right by calling 1-888-567-8688, Option 2. For additional Loan Servicer Information, students may visit StudentAid.gov.

Last updated: 11/10/2020