Student loans are a means of financing your education that many students utilize. You are investing in your future as you improve your employability and earning potential.
We hope you reduce reliance on loans whenever possible to manage your total debt. But ultimately, any debt you have will need to be managed in repayment as well.
You should go into both borrowing and repayment with an understanding of how you can be most successful.
Counseling & Repayment Start
Required loan exit counseling will give you key information on your student loans at the time you leave UC. But you can access information about your student loans at any time.
Loan entrance counseling, required when you first take out a Federal Direct or Grad PLUS Loan, can be reviewed as a refresher on student loan information. As well, use the studentaid.gov to review your own loan borrowing and information on student loans and repayment options.
Remember, you can go into loan repayment at any time you are enrolled less than half-time (< 6 hours for undergraduates and < 5 hours for graduate students due to graduation, withdrawal, or limited registration). Most students have the loan's grace period to prevent repayment during summer breaks. However, you only receive one grace period for your loan. Students who go back to school after entering repayment do not get a second grace period on those loans and go into repayment immediately when they are again less than half-time.
Know Your Loans and Servicers
You may take out several loans while in college. All of your federal loans will be reported via the National Student Loan Data System (NSLDS) and are easily reviewed. Go to studentaid.gov to see the loans you have taken out and find out who is servicing each of your student loans. The servicer is a vendor used by the Depertment of Education, your school, or the lender to manage your loan while it is in repayment.
When possible, the federal process will limit the various servicers you will be assigned. At the same time, separate servicers may be involved to manage your total federal loan portfolio. For students with breaks in enrollment or different types of loans (Federal Direct v. Federal Perkins, for instance), you may be assigned multiple servicers. Be sure to know the servicer for each of your loans so you will know whom to pay and how much is due each month.
Just as important as knowing your servicers is making sure each of your assigned servicers knows you. Contact your loan servicers whenever you change your street address, email address or telephone number. Signing up for online account access with your servicers will ease the process of updating contact information. Additionally, online tools offered by the servicers will allow you to view payment history, change repayment plans, make a payment, and otherwise ensure you remain connected so as to work cooperatively toward full loan repayment.
We would suggest signing up to receive email communications from your servicer. Using files within your email account can help you manage important loan information and have ready access to it as needed.
You want to select the repayment plan that is right for you. A wide range of repayment options exist for federal student loans. But remember that a low monthly repayment amount is not your sole objective. When deviating from Standard Repayment, know that options such as Income-Based Repayment or Graduated Repayment, while lowering your monthly cost, also increase the total amount you pay back on your loan. Tools on servicer websites can model repayment options using actual loan amounts so you can balance both lower monthly payments with total payback on your loans when selecting from repayment options.
Once your repayment plan is selected, there is no greater advice than making on-time payments. Your student loan repayment process will be key in building and maintaining a good credit rating. Develop good on-time repayment habits right from the start.
Having loan payments automatically deducted from your bank account is a good way to ensure your payments are made on time and may even provide a cost savings. Check with loan servicers for interest rate reduction or other benefits that would be available to you if you use automatic debit.
Paying down your loan principal is always wise. Consider paying a little extra each month or whenever your budget will allow. Having extra funds applied to reduce your principal can go a long way toward paying off your loans faster and saving on loan costs.
Seek Out Assistance
Your loan servicers are there to assist you. Seek out their assistance at the first sign of financial difficulty. Financial problems can often worsen if they’re not addressed promptly.
Your loan servicers have heard many borrower problems. Don't be embarrassed or play avoidance with financial difficulty. Contact your servicers at the first sign you’re having trouble. Experienced staff want to successfully resolve past-due accounts, assist you in finding alternative repayment plans, and help you avoid default problems.
In some cases, deferment or forbearance may be part of the solution for your situation. However, these plans should be seen as last resorts. Postponing payments will cost you if unpaid accrued interest is added to the loan balance, and delaying the inevitable repayment just delays the financial burden. Use deferment and forbearance only if absolutely necessary.
Loan Borrowing History Review
The student aid report received after you file your annual FAFSA details your aggregate (total) loan borrowing to date.
Additionally, loan borrowers (both students and parents) can use the optional student loan acknowlegement process at any time to understand how much you have borrowed and anticipate repayment costs. While not a required process, many borrowers find an annual review helpful in better understanding their loan use and plan for future borrowing as federal student loans also have aggregate borrowing limits.