2007

Useful Topics for Student Loan Borrowers

Completing Your Renewal FAFSA

If you completed the Free Application for Federal Student Aid (FAFSA) last year and you plan to continue your education in the next academic year, now is the time to complete your Renewal FAFSA.

To do this, simply visit www.fafsa.ed.gov.* Be sure to:

1. Have the necessary information on hand, such as Social Security numbers, W-2s, tax returns, bank statements, and other financial records.
2. Have your Department of Education PIN available. If you don’t have a PIN, or can’t remember your PIN, request one at www.pin.ed.gov.
3. Complete the FAFSA on the Web Worksheet.
4. Select “Fill out a Renewal FAFSA.”
5. Remember that EAC’s financial aid experts are also available to answer any questions you might have. Contact our Financial Aid Services Team at 1-800-874-9033 or FAS@eac-easci.org.

A Renewal FAFSA will be easier, both because you’ve been through the process before and because the form is shorter.

To learn more, or if this is your first year applying for Federal student aid, visit Completing the FAFSA.

*Paper FAFSA forms are also available, though the processing will take much longer. Contact your financial aid office to learn more.

Credit Cards: The Consequences

Staying on track is easy. Here is how:

• Get only one card.
• Don't charge more than you can afford to pay back.
• Pay off your entire balance each month, before the due date.

Too Many Cards
Your total limit will be considered potential debt (a risk) the next time you apply for a loan.

Charging Too Much
Charging more than you can pay back will get you into trouble quickly. You won't have that credit available when it comes time to buy a car or home.

Paying the Minimum
Choosing to carry a balance on your card from one month to the next and paying only the minimum payment amount is a bad plan. Interest charges will increase your debt and you'll soon get in over your head.

Missing Payments
If you can't make your minimum payment each month, you will begin to accrue interest charges and late fees. Late or missed payments will damage your credit, limiting your ability to buy a car or a house. And bad credit will stick with you for around seven years, even after you get back on track.

Avoid these consequences by thinking very carefully before buying on credit. Already in trouble? Contact your card holder and your local Consumer Credit Counseling service and ask for help. Visit www.debtadvice.org to learn more.

Student Loan Eligibility - Don't Blow It!

To maintain your eligibility, don't:

• Drop to less than half-time status. Be especially aware of this if you decide to withdraw from a class.
• Fail to make satisfactory academic progress. To maintain your eligibility, you must be working toward a degree or certificate and meet standards determined by your college.
• Default on any federal education loans. If you don't pay back your loan, you can't borrow any more. Makes sense, right? Call your loan holder if you have any problems making student loan payments or have a change to your contact information or status (like if you return to school).
• Be convicted of drug possession or distribution.
• Go to jail. You can't borrow student loans from prison.

Know Your Total Student Loan Borrowings

Do you know how much you've borrowed under the various student loan programs? Do you know what your payment amount will be once you begin repayment? If not, find out now.

If you have:

• Perkins loans, contact the college financial aid office.
• Stafford loans, look up your loan account here or contact EAC at 1-800-592-1802.
• Alternative, or private, loans, contact your lender.

How Much Can I Borrow?

Follow these steps to ensure that you borrow within the limits of affordability:

1. Make sure you have explored all of your options before turning to student loans, including work, scholarships, and grants.
2. Understand how much you can except to earn, based on the career field you'll be entering. Learn more by visiting the U.S. Department of Labor's Occupational Outlook Handbook. Keep in mind that if you don't complete your education, you likely won't earn as much, but you'll still need to make those student loan payments!
3. Current guidelines estimate that your student loan payment should be no more than 8% of your expected monthly income, and less is even better. To determine your payment amount, visit Mapping Your Future's Student Loan Calculator at http://mappingyourfuture.org/paying/standardcalculator.htm. Make sure that your expected payment amount is within that 8% guideline.

Get Ready for Repayment

• Get a job. Sure it would be fun to take some time off, but you've got responsibilities and one of those responsibilities is making your student loan payment. That means you need to earn an income. Your college placement office can help.
• Make a budget. This very important step ensures that you have enough money to make that student loan payment, pay your rent, and buy food. Learn more using our Online Budget Calculator.
• Make some payments now. There's no need to wait for your first payment to be due. Make payments now and you may be able to reduce what your monthly payment will be.
• Understand that your loans may be sold. Secondary markets are companies that handle the repayment end of student loans. You will be notified of the name, address, and telephone number of your new loan holder.
• Sign up with your loan holder to have your payments taken automatically from your savings or checking account every month. You'll never miss a payment and some lenders even offer incentives for doing so.

Deciding Whether to Borrow

If your school tells you that you are eligible to borrow a loan, you should seriously think about whether that's what you need to do. Always keep in mind that student loans must be repaid. That can take a long time and will reduce the amount of money you are able to spend on a house, car, vacations, and other things. Think very carefully before borrowing and accept only the student loan funds you really need.

Deciding on a Lender

Once you decide that you need to borrow a loan, you'll next decide which lender to use. This could be a tougher decision than you might think.

Your school may provide you a list of lenders. The list may be very lengthy, showing many lenders that participate in the student loan programs. Or it might be fairly short, called a "preferred lender list." If your school gives you a preferred lender list, there are a few things to keep in mind:

• Schools should base their list on the lenders they believe best serve their students.
• You are not required to select from the school's preferred list.
• You should do your own research to determine which lender's loan will best meet your needs.
• Ultimately, it's your choice, and the school will process the loan for whichever lender you choose.

• Search by lender name or code
• Search by state

• What fees will be subtracted from your loan before you get the money? Lenders are authorized to charge an origination fee and guarantors are allowed to charge a default fee, but these fees may be paid on your behalf in what is called a "front end benefit. "Find out from the lenders you are considering how much you will be charged.
• What interest rate will you pay? Although the maximum rate is set by law, some lenders may in fact charge a lower amount. But be cautious.
  • Some of the interest rate reductions have special requirements. For example, they might require you to authorize automatic payment from your checking or savings account; or they might require you to make all payments on time or you lose the benefit; or they may require you to make a certain number of payments before you receive the benefit. So make sure you understand the requirements of receiving the lender's "back end benefits."
  • Find out how many of the lender's borrowers actually receive the "back end benefits." In some instances, very few borrowers actually meet the requirements to get the "back end benefit." A "back end benefit" is only of value if you actually get to take advantage of it.
  • Find out whether the lender sells their loans to a secondary market. If they do, make sure that the "back end benefits" continue after the sale.
• What kind of customer service will you receive? Is the application process easy? Will the money be there when you need it? Will you be able to get your questions answered promptly and conveniently? Will you be treated with dignity and respect if you get into repayment difficulties?
• Do you and your parents already have a trusted customer relationship with a lender? If so, you might want to at least put that lender on your list to research further.
• Keep in mind that a lender's benefits might vary from year to year. So, the benefits that you receive for the loan you get your freshman year may be different than the benefits promised for the loan you get your sophomore year. Generally, it's to your advantage to stay with the same lender for all of your borrowing, because it makes it much easier to keep track of your loans and to make your payments. However, each year you may want to check to make sure that the lender you initially chose continues to provide the benefits you want.

It's your choice. Do the research. Select the lender that best meets your needs.

Scholarship "Secrets" Revealed

Students are being targeted by companies claiming to be selling the secrets needed to win scholarships. The truth is that you don't have to pay for this kind of information. Take a look at what you can do to win scholarships:

1. Take the right classes. Not just the required classes, but higher-level classes in subjects like math, science, and foreign language.
2. Get good grades. The better your grades, the better your scholarship chances, no matter what type of scholarship.
3. Have a great ACT and/or SAT score. You can improve your score by making sure you have taken higher-level math and science classes and making use of practice tests that may be available through your school counselor. The ACT (www.actstudent.org) and SAT (www.collegeboard.com) web sites also offer test preparation information, some of which is free.
4. Volunteer your time. Making a difference in the world can make a real difference to scholarship committees.
5. Be special. Each scholarship is designed for a unique purpose. Sometimes just being the right person (with the right talents, interests, abilities, or qualities) at the right time is enough to win you a scholarship.
6. Work for it. Finding and applying for scholarships isn't easy. You may have to apply for dozens, or more, before your work is rewarded. But don't bother to apply for scholarships for which you do not qualify. You'll be wasting your time.
7. Know where to look.
   • Ask your high school counselor.
   • Ask at the college financial aid office.
   • Call EAC at 1-800-874-9033.
   • Ask at local community organizations, churches, and businesses.
   • Check with your parents' employers.
   • Search free online sources like www.fafsa.ed.gov or http://www.collegenet.com/mach25/app.
8. Have goals. Scholarships are often based on your intended major and/or career. If you don't have plans, you can't qualify for this type of scholarship.
9. Complete applications fully. Be neat, accurate, write a great essay, and meet all of the application requirements. Ask for help. Your teachers can be a great resource.
10. Understand that scholarships aren't the only way. If you don't qualify for scholarships, hope is not lost. There are other ways to pay for college, including working your way through and applying for other types of financial aid such as grants and student loans. And by following these tips, you may qualify for scholarships next year, so keep applying!

What to Learn Before College

There are things everyone should know the first time they live on their own, and learning them now means you’ll have more energy to focus on your classes when you get to college. Take a look and see where you stand:

Do you know how to:

• Study? Learn some great studying skills by visiting EAC’s Study Smartly.
• Balance a checkbook? Visit Mapping Your Future’s Balance Your Checkbook to learn more.
• Do laundry without turning all your towels pink? Learn how to do your laundry by starting now and asking a parent for help as needed.
• Spend the money you have and not more? Check out https://www2.eac-easci.org/calc/college_budget.htm to learn more.
• Take care of your car? Ask the person who maintains your car now. Make sure to understand:
• How to fill your own gas (you know this, right?).
• When the oil needs to be changed.
• How to replace your windshield wipers, or who to ask for help.
• When you car insurance bill is due.
• What to do when you have a problem.
• Apply and interview for a job? Check out www.monster.com, www.hotjobs.com, or visit a local career center.
• Say “no” to credit card offers? This one’s easy. Just say no. Want to learn more? Visit these articles on the EAC web site:
• Credit Cards and College Life
• Staying in College: Hang in There!
• Credit Cards: The Consequences
• Read a map? This is a good one to ask your geography or social studies teacher, or maybe a parent.

And finally, did you know that it’s okay to ask?

How to Get Ahead with Money

The way that you manage your money can mean the difference between living from pay check to paycheck or building up wealth. What do you need to know to get ahead, or stay afloat, with money? Below are some simple steps you can take.

• Save. Putting money away, both in case of emergency and for the future ensures your financial security. And that's priceless.
• Get on a budget. Having a plan for every dollar you're going to spend doesn't sound fun but having enough money to cover your expenses and even some left over can be really fun!
• Understand credit cards. Every time you use a credit card, you are borrowing money. If you need to borrow someone else's money to buy something, can you really afford to make that purchase? Save ahead for your purchases and you'll get ahead quickly.
• Keep your student loans under control. Student loans can be a great investment in your future or a burden that can affect your finances for a long time. Make sure any student loans that you borrow are a smart move:
  • Earn what you can to pay for college expenses yourself.
  • Don't borrow more than you absolutely need.
  • Make payments on your loans while you're still in school.
  • Pay off your loans early.
• Protect your identity. Keep your personal information private and secure, to do what you can to make sure no one gets a free ride on your dime.

College Students: How to Live on a Ramen Noodle Budget

Here are some ideas for ways to slash your living expenses, so that you can start making ends meet:

• Save gas money: walk, share rides with friends, and use your bike. This can work wonders on your budget and your waistline.
• Keep applying for scholarships throughout college! Why pay for school if you can go for free?
• Be smart with your cash. Don't buy what you don't need, and you'll have the cash available when you really need it.
• Protect your health. Taking care of your teeth, eating healthily, and exercising will save you from expensive health problems.
• Don't join a gym until you check out what's available to you on campus free of charge.
• Rent movies instead of going to the theater.
• When you buy clothes or shoes, make sure they won't look outdated in just a few months.
• Don't let bounced checks and late fees drag you down. Stay on top of your bills.
• Ask for help! Maybe your parents are great money managers. Maybe your best friend always has money left at the end of the pay period. Ask them what you can do differently.

Borrowing Student Loans - The Smart Way!

Here are some easy tips to make sure you're being a smart student loan borrower:

• Keep searching for scholarships throughout your college years.
• Get a part-time job and pay for as much of your education as you can. It's fine for your work to interfere with your play time - just be sure it doesn't interfere with your schoolwork.
• Have a reasonable budget. Stick to it.
• Never borrow any more than you absolutely need.
• Know what you can afford. Your monthly student loan payment should not be more than 8% of the amount you expect to earn monthly once you graduate.
  • Determine your payment.
  • Determine your potential future income.
• Keep searching for scholarships throughout your college years.
• Use alternative/supplemental loan programs only as a last resort. Fewer repayment benefits and higher interest rates mean this type of loan is significantly more expensive than Federal Stafford or PLUS loans.

Holiday on a Budget

Because it's easy to get in over your head with credit. Because every dollar that you borrow (because that's really what you're doing) on your credit card is a dollar you don't have to spend on something else, like your college expenses.

Here are some easy tips to keep your spending under control:

• Make a list and check it twice (or three times). Take a look at every holiday expense you have and set aside money for it.
• Make some gifts, or give of your time. Maybe someone on your list would appreciate home-baked cookies or you shoveling their sidewalk more than yet another coffee cup or scented lotion. Maybe some relatives would rather get a nice long letter letting them know how college is going than a gift.
• Spend just a little less on each gift. Do you normally spend $20 on a gift for a relative? Make it $15 this year.
• Ask people what they want. Why spend money on something that no one wants? Ask, and know that your money is well spent.
• Back off travel. This is a tough one, but think about how much more relaxed your holiday will be if you aren't running from one gathering to the next.
• And next year, save ahead! You won't be sorry!

Easy access to credit cards has made being a "poor college student" a thing of the past for many students. Instead, there are poor college graduates (and drop outs) who can't afford their bills. Below are some tips to remind you what it really means to live like a college student.

• Get a job. Working a reasonable number of hours is a great way to make ends meet. Increase your hours over the summer and save up for next year.
• Stay in the dorm and/or get a roommate or two.
• Drive a car that you can afford. Your car shouldn't be nicer than your professors' cars.
• Stay out of the mall. There are more important things to spend money on, like textbooks.
• Eat out, but only rarely. Like when your parents come to visit, and they pay.
• Think about working or volunteering during your spring break instead of partying.
• Avoid credit card debt. If you have a credit card for emergencies, keep in mind that a pizza craving is not an emergency. If you're trying to build up your credit rating, only charge what you can pay off in full every month.
• Remember that college is temporary. Overwhelming debt lasts a lot longer.

Take Charge of Your Spending

The word "budget" may make you cringe, so think of it as a spending plan and use one to get your money under control! A spending plan is a tool that helps you to know how much money you have coming in and how much is going out.

1. Sit down and write out all of your income and expenses for this month. Include food, rent, utilities, and all of your other expenses.
2. As the month progresses, evaluate where you misjudged. Are you spending more money eating out than you expected? Did you forget to account for a certain area, such as gifts?
3. Make changes. A spending plan makes it easy to see where adjustments are needed. If you need more money to pay your bills, then spend less in an area such as clothes or entertainment.
4. Keep at it. Your money seems to go farther when you keep track of it!

Useful Topics From 2006
Borrowers Impacted by Hurricane Katrina
Credit Cards and College Life
Making Payments While You're Still in School
Military Deployment
PLUS Loans - Are They for You?
Save Your Pennies
Scholarships
Staying in College: Hang in There!
Subsidized or Unsubsidized - What's the Difference?
What is Entrance Counseling?

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