The hope is that you will be able to fund your college education through savings,
grants and scholarships, and maybe work study or a part time job. If a loan is needed
as a last resort, borrowing wisely can save you hundreds or even thousands of dollars
over time. Doing research for the best loan for your family, learning about the
loan you choose and paying the interest if your loan charges it while in school
are all little things that can make a BIG difference.
Do Your Research
Not all loans are the same. Make sure you know the type of loan you have, the interest
rate and the repayment terms. Remember some loans offer benefits during school and
after graduation in the form of repayment incentives. For example, you may receive
an interest rate reduction when you sign up to have your monthly payments withdrawn
from your bank account electronically.
Pay Attention to the Mail
You will receive important information regarding your student loan before, during
and after school. Read all materials you receive carefully - and if you have questions,
do not hesitate to get full answers. You have rights as a borrower. Read your correspondence
so you do not miss out on important deadlines or details.
Attend All Required Entrance and Exit Counseling Sessions
You will be required to complete loan counseling sessions when you first obtain
a federal student loan (entrance counseling), and again upon graduation (exit counseling).
Many schools offer this on-line, and the sessions will not require a great amount
of your time. They will, however, provide you with a great deal of information about
your rights and responsibilities as a borrower.
Pay Interest on Unsubsidized Loans While You are in School
If possible, pay accruing interest while you are in school. These payments may be
small, but they will reduce your overall debt when you enter repayment. For example,
interest accruing at a rate of 5% equals roughly $4 per month per $1,000 borrowed.
If you choose to have the interest capitalized (i.e. added to your loan balance)
instead of paying the interest on a regular basis, the total interest that accrues
and would be capitalized on a $5,000 loan over a 4-year in-school period is $1,000.
Even small amounts of money can add up fast!
Always remember if you have a question about anything on this site, feel free to
drop us a note at outreach@ismloans.org
and we’ll be happy to answer or elaborate on an item that is confusing or unclear.