This tip is so important… I simply can’t stress it enough. It centers around my biggest pet peeve: college students who don’t know how much they’re borrowing in student loans.
Sound like you? I’m not entirely surprised, because it’s true of most college students with loans. It simply doesn’t feel like something very important. I mean, you’ll worry about it when you graduate, right?
Wrong. That’s how I thought, until one day, early in my junior year, I actually dug up my student-loan-dirt, and calculated how much I owed. And holy-moley, the number was so bad, I dropped out of school. Not even kidding.
That doesn’t have to happen to you. This tip is deceptively short and sweet because… I’m just repeating myself. I’ve already written about this:
Keeping Your Student Loans on a Short Leash
Read it. Do it. That’s your money tip for this week. If you have loans, this tip is so much more important than all the rest. In fact, if you do this tip, and none of the others, consider yourself having earned an A- in my class. Because you’re way above average… just by getting a handle on what you owe.
I think it is SO nuts how little most college students know about their loans. I was right there with you too. Great tip
Okay, I have some questions! I got my “financial aid” package from my school. I haven’t signed anything yet because I want to know exactly what it is I am signing and since I’m the first one in my family to go to college and I don’t have a high school guidance counselor, well, I’m a little apprehensive. I also registered for orientation at the end of this month. The orientation letter says something to the effect of “Please have all of your financial aid documents signed and completed prior to orientation.” Well, but I want to actually talk to one of the counselors before I sign all those silly legally-binding document.
So, I guess I’ll ask at least one of my questions here —
Can I work on repaying the loan before graduating? I’m getting a Stafford subsidized for the max amount (boo) and an unsubsidized for a smaller amount. Basically, I think I can pay for most, if not all, of the unsub loan up front. But I’m not 100% sure and I don’t want to show up with a $0 balance on my checking account since I don’t know what my work situation will be like and of course, I’ll still have to get books and I have other non-school bills to pay, too.
Also, if I take out a loan then I receive a scholarship, will that scholarship money be applied to my loan amount or will I have to save it for next semester?
Also, why is it that “room and board” fees work out to basically $900 a month for a teeny room that I will have to share and a bed that I don’t even get to pick out and isn’t long enough and walls I can’t even paint and no kitchen? How is that fair?
I guess that was three questions. And the last one is kind of rhetorical since the answer is, “Because they can. Just be glad you aren’t going to [XYZ University] where they charge a whole lot more.”
@brista – You do have a lot of questions! That’s alright – I’m really glad to see someone in your position asking these questions, instead of blindly flying into it. Kudos!
First of all, you can always call your future-college’s financial aid office and set up a meeting, or a time to talk to one of their counselors on the phone. This may be a good idea, if you still have questions before you sign.
Secondly, yes, you can make repayments on your loan while you’re in school. A few weeks ago, I sent a rather large check to my loans, to pay off the interest that’s built up on my unsubsidized loans. You can do this at any time, and it doesn’t hurt you any (with federal loans).
If you receive a scholarship after you’ve taken out your loans, what will usually happen is that the money will be applied to your student account, and you will have the opportunity to get a “refund” issued to you as a check, so you can use that money on books or supplies. This would be something to check with your particular school, though – this is something that has to do with their policies, it’s not universal across all colleges.
Room and board: that covers the cost of the room, electricity, internet, phone, probably cable, and your meal plan at the dining hall. I don’t have a lot of information to go on, but I’d say that number is probably average, $900/month. My college is charging $1040 per month for that same thing for the 2008-2009 school year. The meal plan accounts for nearly half of that. Also, our dorms are awful: ugly, small rooms with bad lighting. But I loved them… I really loved living with all of these great people within walking distance, and food within walking distance… it was a great community, and totally worth the cost, for me personally.
Long questions, long answer! π
Nicely put!!! It’s wonderful seeing you get the message out to help people before it’s too late π one of the best parts about blogging! (comments are another in my opinion)….so glad i get to leave one π
enjoy the weekend!
Just the other day I was talking with one of my friends. He is graduating in two months from an accounting program with $20,000 worth of student loans. We were talking about life after graduation and he said he may take some time off to travel or relax. I found this to be mind boggling and I told him he needs to focus on paying off those loans. He is not worried because he thinks he will be earning so much money that he can pay them off within a few months. Oh man I pointed to him to a few great pf blogs and now he’s mad at me. I’d rather be realistic now as opposed to in a few years when it hits me that I am still in debt.
Short, simple, and straight to the point. I wish I had had the foresight to start monitoring (and paying down) my student debt when I was still a student. As it stands, I graduated nearly three years ago, and only started really paying attention to my student loans last year. Luckily, I’ve paid them down pretty well, but it’s still my biggest debt.
You’re right, it’s a little crazy that students don’t know what they owe, but in reality, most of them won’t think about it (rightly or wrongly) until after college when they have to start paying it back.
As well, all you can do is educate and advise. Hopefully this will help some people though I suspect still only a small percentage of students.
I think the idea that “everything will just work out ok” is a fallacy for many students with big loans in today’s economy. More and more, a hard financial look about risk-reward will be necessary I think to prevent early bankruptcies …..
I think the biggest reason why most people don’t know, is because they don’t want to know…
They have enough stress from tests, their thesis, dating and everything else.
Not the wisest course of action to ignore it, but the reasoning behind it isn’t to hard to figure out.