Useful Topics for Student Loan Borrowers

Credit Cards and College Life

As a college student, you've probably received dozens of credit card offers. But think carefully before signing up. A credit card can be a great tool to help build a good credit rating or to have in the case of an emergency, but it's also easy to get in over your head.

Think about these tips before you become the holder of a shiny new card for your wallet:

• Do you really need a credit card? If you have a car or student loan, a cell phone or are renting an apartment, you're already building a credit rating. Think about waiting awhile for your first credit card.
• Know what an emergency is. Before you have a credit card, you may think of an emergency as something like your car breaking down or unexpected medical expenses. But after that card is burning a hole in your pocket, it's easy for a Friday night pizza craving or those great jeans at the mall to turn into an "emergency." But using your card this way can get you into serious trouble. Proceed with caution!
• Pay off your balance every month. If you can't do that, put the card away until the balance is paid.
• Stay in control. Only get one card, and keep the credit limit low.
• Be choosy. Don't pick a card just because they're giving away free t-shirts or coffee mugs. Pay attention to interest rates, fees, and terms, even if these aren't as fun!
• Know when to get out. Have you hit your credit limit? Are you only making the minimum payment - maybe on more than one card? Are you making late payments or missing them all together? Then it's time to get out. Cut up the card. Call the company and close your account. Then, work toward paying off your debt.

Save Your Pennies

As a college student, you're probably more concerned about where you're going to get money for tonight's pizza than saving for the future. But no matter how small your paychecks are - whether from an on-campus, off-campus, or summer job - it's important that you put some away for a rainy day.

Why is it so important to save - even if it means you have to switch to frozen pizza? Because, what happens if your car breaks down? Or your fines for that library book are more than this month's rent? Sure, you could call Mom and Dad - but what if they aren't interested in financing your book-losing habit? Or you could charge it to a credit card. But when or how will you pay that back? Once you start relying on your credit card to get you out of sticky situations, it's way too easy to end up with so much credit card debt that you can't afford to buy a new car or the bank won't give you a loan to buy a house.

Save yourself the trouble - have some money in the bank (or under you mattress, whatever works for you) when that rainy day comes!

Subsidized and Unsubsidized - What's the Difference?

Keeping track of student loan "lingo" can get overwhelming. But a couple of terms that relate to your Federal Stafford loans to be aware of include "subsidized" and "unsubsidized." What do these terms mean for your Federal Stafford loans?

If your loan is a subsidized loan, the federal government pays the interest for you while you are in school at least half time, in your grace period, or in an approved deferment period.

If you borrow an unsubsidized loan, you are responsible for the interest at all times. The federal government does not pay any interest for you. If you decide to borrow this type of loan, it's a great idea to make interest payments on the loan even prior to the time the loan is in repayment. This will save you money in the long run.

Whatever student loan type you are looking at borrowing, make sure you only borrow what you absolutely need. Student loans can be a great tool when you're financing your education, but the fewer loan dollars you borrow, the more money you'll have to spend on fun things later!

To learn more of the language of financial aid, check out EAC's Glossary of Terms.

Borrowers Impacted by Hurricane Katrina

EAC wishes to extend our sympathies to those affected by Hurricane Katrina. We encourage any borrowers with questions about the impact on their student loans to contact EAC at 1-800-592-1802 or eac@eac-easci.org .

You may also find financial aid and school enrollment information at the following Hurricane Katrina-related web sites:

U.S. Department of ED general information web site.

NASFAA Katrina-related web site.

ACE and NACUBO CampusRelief.org web site.

Military Deployment

If you’ve been called to active military duty and have student loans, EAC would like you to be aware of the options that may be available to you.

If your status is in-school, grace, or in-school deferment you may be eligible to extend this status for up to three years during your active duty. Contact EAC at 1-800-592-1802 for more information on this option.

If you are in repayment status you may be eligible to postpone or adjust your payments through deferment or forbearance. To learn more about this option, contact your loan holder.

Tips for managing your student loans:

• Know where your loans are. To find your loans, log in here, then print and complete our Student Loan Log.
• Keep track of your spending. Develop a plan for the money coming in and the bills going out. This is especially helpful in keeping everything in order while you are deployed. For help, check out EAC's Monthly Income and Expense Worksheet.
• Sign up for electronic payments, which automatically deduct student loan payments from your checking or savings account. This option may also be available for your other bills.

Scholarships

Scholarships, if you can get them, are the best way to pay for college. A scholarship is free money, that doesn't need to be repaid, and is awarded based on your achievements and/or background. Sounds great, right? The trick is finding scholarships, and then doing your best to be awarded those scholarships!

Finding scholarships to apply for can be a little like detective work. Start with your college financial aid office and/or high school counselor. They can provide you with a listing of scholarships for which you may be eligible. Check with them often to see if anything new has come in.

Another good place to check is your local library, both for publications listing scholarship opportunities as well as postings of scholarships offered by local organizations and businesses.

While local scholarships or those offered by your college are your best bet, don't overlook doing a national scholarship search. There are several sites offering free scholarship searches, so check those out as well:

• www.fastweb.com
• www.collegenet.com/mach25/
• www.srnexpress.com

As you find scholarships (and be sure to never stop looking!), follow these tips to help you have the best chance of winning:

• Be aware of deadlines, and get your scholarship applications in on time.
• Read and follow application directions carefully.
• Proofread everything.
• List all of your activities and honors, making sure to highlight those that are most relevant to each scholarship.
• Be thorough when you write your essay. Ask for help if you need it.

What is Entrance Counseling?

If this is the first time you’ve borrowed a Federal student loan, you may be required to go through "Entrance Counseling" before your loan funds are disbursed to you. Entrance Counseling is designed to make sure you fully understand your loan and how it works, and that you’re aware of your obligation to repay your loan(s) in full. Topics covered during Entrance Counseling may include things like:

• The Master Promissory Note
• Loan types
• Repayment terms
• What happens if you don't make your loan payments

Your college may offer Entrance Counseling in one of the following ways:

• In person, in a group setting or one-on-one,
• Through printed materials (such as EAC's Accepting Your Student Loan brochure), or
• Online, like the counseling offered through Mapping Your Future, http://mappingyourfuture.org.

Your college financial aid office will provide you with the information and instructions necessary for you to complete this requirement.

To learn more about Entrance Counseling at your college, contact the financial aid office.

Making Payments While You're Still in School

Did you know that you can pay ahead on your student loan at any time without penalty? Any amount of money you can prepay will save you interest charges in the long run – it's like giving a gift to your future self.

If you have borrowed through the Unsubsidized Federal Stafford Loan Program, seriously consider paying off your interest as it accrues, even if you are still in school and payments aren't yet required. If you don't, that amount will be added to your total amount owed (it will be capitalized), before you enter your repayment period. It really adds up! And if you can afford it, add a little extra to your interest payment to pay down some principal, reducing the amount of interest that is accruing.

Your payments will be made to your loan holder. If you're not sure who that is, EAC can help. Give us a call at 1-800-592-1802. Be sure to include your loan number and account or Social Security Number on any payment check!

To learn more about making payments, including information for borrowers in a repayment or default status, visit Make a Payment on the EAC web site.

Staying in College: Hang in There!

Student loans can be an excellent investment in your future. But did you know that even if you drop out and don’t finish your degree, you still have to pay back your student loans?* For this reason and many more, staying in college and finishing your degree is the smartest route for you to take.

The top two reasons that students drop out of college are (1) credit card debt, and (2) academic failure. Below are some tips to keep these factors from getting in the way of your success.

• Put off getting a credit card until you are out of college.
• Get only one card.
• Shop around for the best terms: low interest rates, no annual fee, etc.
• Pay off your balance every month.
• At the very least, pay more than the minimum payment amount every month.
• If you plan to use your card for emergencies only, think hard about what is really an emergency (that would not include Friday night pizza and movie rentals).
• Think about the real cost (including interest charges and fees) before buying something on credit.
• Make your payments on time. Late fees get scary very quickly.
• Ever heard the term, “poor college student”? You’re supposed to live like one now.
• If you get in over your head, cut up the card, call the company to close your account, and work out a plan for repaying your balance.

• Schedule time for studying and make it part of your routine.
• Prioritize – studying is more important than partying.
• Ask for help – talk to your professor or advisor, hire a tutor (some colleges provide them free of charge), or start a study group with classmates.
• Find a new way to study – change your environment, timing, or study plan.
• Deal with outside problems before they interfere with your academic work.
• Keep in mind that college is more demanding than high school and you will be required to put in more time and effort.

College is a serious commitment, but worth your time and energy. Don’t blow it!

*Guess what? You also have to pay back student loans even if you can’t find a job or aren’t satisfied with your program of study. You can’t even get rid of them by filing for bankruptcy (most of the time). So think carefully before you borrow!

PLUS Loans - Are They for You?

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