Guidelines For Debt Management

image of dictonary entry for debt

How to finance

Taking out student loans can be intimidating if you are not familiar with the process.  The best recommendation we can give you is to M-A-N-A-G-E your loans.  These steps will help from the start of the loan to making payments.

M – Monitor your debt
It is critical to consistently monitor your loan indebtedness while in school so you have a realistic understanding of your financial obligations once you are out of school. You may check your loan history on MyNOVA.

The amount that can be borrowed by or on behalf of a student is based primarily on the cost of attendance, the amount of other financial aid that the student is eligible to receive and the amount that the student and, for dependent students, their parent(s) are able to pay toward their educational expenses.  As you consider borrowing, you are encouraged to seek ways to minimize your school related costs (e.g., living expenses, books and supplies, transportation, etc.), take advantage of all sources of financial assistance, including outside grants and scholarships and, if borrowing is still needed, start with the Federal Direct Loans.  The Direct PLUS or Direct Graduate PLUS loans and Private Alternative Loans can also be used to help cover the cost of attendance if additional funding is needed.

To help manage your federal student loans, we recommend that you visit the National Student Loan Data System (NSLDS) Student Access website (www.nslds.ed.gov) today. NSLDS provides a central database for Federal Student Aid and allows students access to view information from schools, guaranty agencies, the Direct Loan program, as well as other federal programs; which is a valuable tool in managing your federal student loan information.

You will need your Federal Student Aid PIN to access the website; you have used the PIN when electronically signing your loans or when completing your FAFSA.  If you no longer remember your PIN, you can request a duplicate PIN be sent to you at www.pin.ed.gov.

A – Avoid the overuse of credit cards
Credit cards are tempting, particularly for students on limited budgets. However, use them responsibly. A negative credit history will jeopardize your ability to secure a mortgage, a car loan, or other lines of credit in the future.

Consider these tips:

  • Reserve credit card use for emergencies only
  • Limit yourself to one card
  • Avoid "impulse" purchases
  • Pay your balance each month so as to avoid interest charges

N – Need to organize a loan file
It is highly recommended that you create and maintain a file of all financial paperwork.  This file should include copies of all applications, promissory notes, lender correspondence, disclosure statements, and any other important documents.

A – Acquaint yourself with your servicer
Loan servicers can be the original lender, a new lender who has purchased the loan from the original lender, or a third party.  They have a variety of duties to ensure that the loans are administered in compliance with federal regulations and guarantee agency requirements.  Some of these tasks include: disburse loans funds, monitor loans while the borrowers are in school, collect payments, process deferments and forbearances, respond to borrower inquiries, and maintain loan records.

G – Gain understanding of your loan terms and conditions of repayment
The first step to understanding the terms and conditions of repayment is to read and understand the Master Promissory Note (MPN) before you sign it.  The MPN is a promissory note that can be used to make one or more loans for one or more academic years (up to 10 years). There are two types of MPNs in the Direct Loan Program: one for Direct Subsidized/Unsubsidized Loans and one for Direct PLUS Loans.       

If you are an undergraduate student borrower or a graduate/professional attending a school that is authorized and chooses to make multiple loans under the same MPN for more than one academic year, you may be required to sign only one MPN for all of your Direct Subsidized Loans and Direct Unsubsidized Loans. If you enroll in college as a freshman and borrow under the Direct Loan Program for all years of study, you may be able to borrow under this one MPN for all academic years.

If you are a graduate/professional student borrower attending a school that is authorized and chooses to make multiple loans under the same MPN for more than one academic year you may be required to sign only one MPN for all of your Direct PLUS Loans. You may be able to borrow under this one MPN for all academic years of graduate/professional study.

If you are a parent borrower whose child is attending a school that is authorized and chooses to make multiple loans under the same MPN for more than one academic year, you may be required to sign only one MPN for all of your Direct PLUS Loans. You may be able to borrow under this one MPN for all academic years of that child's undergraduate study. Note: Parents must sign an MPN for each child for whom they are borrowing.

After the loan is first disbursed, you should make yourself aware of the grace period, interest rate, total balance, and repayment options that are available.  This information is important to understanding your loan from the beginning, and can prevent any consequences of delinquency or default that may occur from late payments.  It will also help to you when creating a budget, and keeping the costs down on the loan.

The servicer of your loan will be able to assist you if you have questions on these items, and will be able to help you if you are having trouble with the current payments.   The servicer will send a repayment disclosure statement during your grace period to inform you of the terms of repayment.

E – Establish a budget
A budget is the most important tool you can have while you are in school. It is a framework for "living within your means." In order to create a realistic budget, you must first assess your current lifestyle and spending habits. You must also recognize that, more than likely, these patterns will drastically change when you become a full-time student.

You should start by itemizing your basic monthly living expenses, such as: rent, utilities, food, clothing, laundry, transportation, entertainment, and so on. A monthly budget is preferable to semester or yearly budget because it allows you to assess both your short-term and long-term expenses. The next step is to itemize your financial resources, such as parental/family support, savings, part-time work income, and so on. Now you should be able to compare your projected monthly expenses to your projected monthly income, thus assessing your need (if any) for student loans to bridge the difference.  A breakdown on how to create a budget is located on the website http://mappingyourfuture.org/money/budget.htm.

Create a Budget

A budget is the most important tool you can have while you are in school. It is a framework for "living within your means." In order to create a realistic budget, you must first assess your current lifestyle and spending habits. You must also recognize that, more than likely, these patterns will drastically change when you become a full-time student.

You should start by itemizing your basic monthly living expenses, such as rent, utilities, Internet and cell service, food, clothing, laundry, transportation, entertainment, and so on. A monthly budget is preferable to semester or yearly budget because it allows you to assess both your short-term and long-term expenses. The next step is to itemize your financial resources, such as parental/family support, savings, part-time work income, and so on. Now you should be able to compare your projected monthly expenses to your projected monthly income, thus assessing your need (if any) for student loans to bridge the difference.

Resources

The following tools will help you calculate your monthly loan payments. Note that they are only recommended as resources and should not be used to yield true repayment figures.  A breakdown of each repayment option can be found on the website www.studentaid.ed.gov.

Repayment Calculator – for Standard, Extended, and Graduated Repayment

Income-Based Repayment Calculator

Income Contingent Repayment Calculator

Net Price Calculator

Additional Links

www.aessuccess.org

www.accessgroup.org/calculators

www.finaid.org/calculators

 

Servicers for Federal Loans:

Aspire Resources Inc. - Phone: 855-475-3335 - Website: www.AspireResourcesInc.com

CornerStone - Phone: 800-663-1662 - Website: www.MyCornerStoneLoan.org

Direct Loan Servicing Center (ACS) - Phone: 800-848-0979 - Website: www.myedaccount.com

Department of Education Student Loan Servicing Center (ACS) - Phone: 800-835-4611

EdManage - Phone: 855/479-0490 - Website: www.EdManage.MyEdLoan.com

ESA/Edfinancial - Phone: 855/337-6884 - Website: www.edfinancial.com/DL

FedLoan Servicing (PHEAA) - Phone: 800/699-2908 - Website: www.myfedloan.org

Granite State – GSMR - Phone: 888/556-0022 - Website: www.gsmr.org

Great Lakes Educational Loan Services, Inc. - Phone: 800-236-4300 - Website: www.mygreatlakes.org

KSA Servicing - Phone: 877-292-4825 - Website: www.ksa.myedloan.com

MOHELA - Phone: 888-866-4352 - Website: www.mohela.com

Nelnet - Phone: 888-486-4722 - Website: www.nelnet.com

OSLA Servicing -  Phone: 866-264-9762 - Website: www.osla.org

Sallie Mae - Phone: 800-722-1300 - Website: www.salliemae.com

VSAC Federal Loans - Phone: 888-932-5626 - Website: www.VSACFederalLoans.org

One-to-two weeks after the first disbursement, parents/students will receive a mailing notifying them of their selected loan servicer.