Before I step off my soapbox, I’ll preach it one last time: Scholarships! They’re gifts of money that you apply for, and if awarded, do not have to be paid back. Remember, scholarships will be a student’s best friend. Seek out as many scholarships as you can!

Now, for today’s main topic: Student Loans. Loans allow you to borrow to pay for college, but they must be repaid. However, they are also an investment in your education and future.

Here are few thoughts to refresh your memory regarding student loans:

Review award letter. Borrow responsibly.

To get a federal student loan, you must complete the FAFSA. Your college uses the FAFSA to determine the types of financial aid you will receive, including your eligibility for federal student loans. Expect a financial aid award letter from all the colleges you listed on your FAFSA, if you were also accepted for admission.

Review the offer carefully, noting what you’re eligible for in scholarships, grants, work-study, and student loans. Compare the award offer to the total estimated cost for the school year, and if you need a loan, borrow responsibly.  See EducationQuest’s Loan Chart for more information on the different loan types.

Student Loan Website

If you are a new loan borrower you will need to visit StudentLoans.Gov to sign a Master Promissory Note, where you agree to pay the loan back once you enter the repayment phase. You will also need to complete Entrance Counseling, where you learn about the loan terms and answer interactive questions showing you understand the responsibility you take on with student loans.

Parent PLUS Loan

If a student comes up short in having enough financial aid to cover the cost of education, the college might offer a Parent PLUS Loan to the student’s parent or guardian. This is a loan only in the parent’s name; the student is not legally responsible for this loan. This loan is also subject to credit approval. Parents who choose to accept a Parent PLUS Loan will need to visit StudentLoans.Gov to sign for the loan using their own (parental) FSA ID username and password.

National Student Loan Data System (NSLDS)

If a student is unsure of how many student loans they have in their name, or the amount of those loans, they can find that information on NSLDS.ed.gov. Again, the FSA ID username and password is required to login to this website. In addition, a student can see how much Pell Grant eligibility they have used during their college career.

Pay attention to your Loan Servicer!

Once a student graduates or stops going to college, the college will then pass the loans onto a Loan Servicer, which is a private company that will coordinate the payments for the loans. They often send correspondence in the mail, or email, to keep you informed about your loans. You can also create an online account, and many offer the ability to make online payments. If you are uncertain who your loan servicer is, you can find that out on NSLDS.ed.gov. Also, here is a list of Loan Servicers.

Consolidation and Repayment Plans

If you borrow many student loans over multiple years, you might consider consolidating your loans into a single loan. There are pros and cons to doing this, so be sure to research how consolidation may affect interest rates and your monthly payment. Your loan servicer, and also studentloans.gov, can provide more information. Also, there are certain Income-Driven plans available that can result in a lower monthly payment but also extend the life of your loans. For example, the standard repayment plan is a 10-year plan to pay off the loans. An Income-Driven plan may actually extend your payment plan up to 25 years. Do your research and find the best option for your needs. Check out the Federal Student Aid’s Repayment Estimator to model different repayment programs (you’ll need to login with your FSA ID username and password).

Stay on top of your payments!

You will have to make monthly payments on your loans. If you fall behind, or miss payments, that can impact your credit score and if your loans get placed in default status, it will affect your future ability to get a credit card or buy a house or car. In contrast, if you make successful payments or even pay your loans off early, the accounts will reflect as positive in your credit history.

No quick/easy way to forgive loans!

There are certain forgiveness programs available for student loan borrowers. Studentaid.ed.gov is a great place to begin researching those different options. However, unless there is a major life-altering incident (such as permanent disability), the loans may require a certain amount of successful payments for forgiveness is granted. For example, a borrower might pay 10 years’ worth of monthly payments before getting the rest forgiven through Public Service Loan Forgiveness. Click here to learn more about the different options.

In conclusion, scholarships will always be a student’s best friend. However, if loans are used to pay for college, take a serious approach to this topic. At the end of the day, these are financial decisions, so always do your research and make educated decisions regarding your money.