Managing your Student Loans

Take Charge of Your Student Loans

Learn how to manage your student loan debt. Borrowing for a Creighton University education carries serious responsibilities. Students who wait to cross that repayment ďbridgeĒ until they come to it may not be as prepared to handle their obligations as they should be. Through careful planning and preparation, loan repayment will be more manageable.

 

Paying for a post-secondary education with student loans may be the only option for many students. You owe it to yourself to understand the responsibilities and obligations as a student loan borrower. The more informed you are now, the more prepared you will be when in comes time to start repaying your loans. Sometimes, students get caught up in all the activities of a new school year, studying, graduation, job seeking, never really give student loan repayment serious thought. Donít say, ďStudent loan repayment? Iíll cross that bridge when I come to it.Ē Repaying your student loan is something you need to be consciously aware of at all times.

Borrowing Tips:

  • Never borrow more than you need. Scholarships, savings, earnings, and help from family should be the first choice to pay for school.
  • Keep track of how much you borrow each year.
  • Stay in touch with your loan servicer.
  • Many CU graduating Seniors go on to graduate or professional school. Keep undergraduate borrowing to a minimum if you think you will continue borrowing for graduate school.
  • Keep copies of all correspondence and documents pertaining to your loan.
  • When you leave school, develop a budget that includes your student loan repayment.
  • Contact your loan servicer if you have problems making your loan payment.
  • Student loan repayment affects your credit rating.
  • Always open your mail and read all correspondence related to your loan.

Loan Programs at Creighton University

Visit our Loan Program link for information on the Federal Perkins, Federal Direct(subsidized and unsubsidized), PLUS loans, and alternative loans. Remember, all Loan disbursements have a federal origination fee deducted from each disbursment. See your loan disclosure statement provided by your loan servicer for current rates.

Financial Plan

Although the award notification indicates maximum loan eligibility, you need to sit down and carefully look at your costs and available resources. By keeping your borrowing to an absolute minimum, it will make a big difference in your monthly payments. Use the in-school budget worksheet to build a budget each year,  or use the more detailed monthly budgeting worksheet.

Repaying your student loans

Steps to Loan Repayment booklet.


Inevitably, the time will come when you have to begin repaying your student loans. If you have planned ahead, the process of repayment will probably go quite smoothly. Repayment generally begins six months after graduation or you are no longer enrolled at least half time.

Your loan servicer will place you in the Standard Repayment Plan unless you request another plan.  Go here to find out what lender or servicer is holding your current and past Stafford, PLUS and Grad PLUS loans: http://www.nslds.ed.gov/nslds_SA/

PRE-PAYMENT:  You may pre-pay all or part of your loan at any time without penalty.  This may substantially decrease your total interest costs.

STANDARD PAYMENT PLAN:  The maximum repayment period is 10 years (excluding periods of deferment or forbearance). See repayment chart below for estimated payments.

GRADUATED PAYMENT PLAN:  You may begin to repay the loan with small monthly payments that increase over time.  This option assumes that your income will grow enough to cover the increasing loan payments.  You will pay a somewhat higher amount of interest that you would under the standard plan.

INCOME BASED PAYMENT PLAN or "PAY AS YOU EARN PAYMENT PLAN":  Payments are based on Federal student loan debt, income and family size.  The maximum length of repayment is 20 -25 years.  Contact your loan servicer to see which plan you qualify for.

EXTENDED REPAYMENT PLAN:  This plan is available if you borrow a student loan for the first time after October 07, 1998 and you have more than $30,000 in student loans.  Payments can be extended for up to 25 years.

CONSOLIDATION:
  Your outstanding loans (Federal Stafford, Unsubsidized Stafford, Grad PLUS, Perkins, HPSL, and Nursing Student Loan Program) can be combined into a single new loan with new terms Ė  i.e., a  new interest rate and a longer repayment period (up to 30 years).  While this may reduce your monthly payments, it will result in higher total interest costs. Currently lenders are no longer offering consolidation loans to students.  Anyone interested in consolidating loans should go to the Dept. of Education web site for more information. www.loanconsolidation.ed.gov.

LOAN CANCELLATION:  Loans may be cancelled upon the death or total and permanent disability of the borrower, or upon the death of the student on whose behalf a parent borrowed a Federal PLUS Loan.

INCOME SENSITIVE:  Allows borrowers to have their payments based on a percentage of their monthly gross income.  Monthly payments must be at least equal to the interest that accrues monthly.  If interest-only payments still pose a financial hardship, reduced payment forbearance may be granted, and unpaid interest will be capitalized at the end of the forbearance period.  In the event that payments under an income sensitive plan will not pay off the loan with the maximum repayment term, lenders must grant up to five years forbearance.   Borrowers must provide information to their lender every 12 months to continue their income sensitive repayment.  NOTE:  PLUS Loans are not eligible for income sensitive repayment.  

PUBLIC SERVICE LOAN FORGIVENESS (PSLF): A program that allows borrowers with direct loans to have the remaining balance of their federal loans forgiven after 10 years of full-time employment in a tax exempt organization and 120 satisfactory payments.  Eligible loans are the direct subsidized, unsubsidized, GradPlus, and colsolidation loans.  To get other federal loans such as Perkins, Health Professions Student Loan, FFELP Stafford subsidized, unsubsidized or GradPlus loans eligible for forgiveness, borrowers should consider a direct consolidation loan.  More information on PSLF can be found at http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp

Standard Repayment Schedule

This schedule assumes the Unsubsidized interest rate of 6.8% and does not include interest that may have been capitalized.

Principal Amount

Monthly Payment

Total Interest Paid

$10,000

$115

$3,809

$20,000

$230

$7,619

$25,000

$288

$9,524

$40,000

$460

$15,239

$50,000

$575

$19,048

$75,000 

$863

$28,572

$100,000

$1,151

$38.096

$140,000

$1,611

$53,335

As a general rule, you may estimate your monthly payment to be $115.00 for every $10,000 subsidized/unsubsidized loan you borrow. For Grad PLUS loans at 7.9% interest, you may estimate your monthly payment to be $125 for every $10,000 you borrow.

Loan Repayment calculators

Be aware of interest capitalization

For unsubsidized direct loans and Grad PLUS loans, the loan servicer will generally add the accrued (capitalized) interest to the principle balance at the time of repayment. If you choose the option to let the interest accrue, this may add up substantially while you are in school. For example, a $10,000 loan at 8% interest will add $800 to your balance each year you are in school. Remember, interest will accrue on each loan borrowed for every year you are in school. It is highly recommended that you make periodic interest payments on your loan. Maybe your parents would agree to help with interest payments. If you choose to let the interest accrue, send what you can when you can.

What if I canít repay my loan?

For whatever reason, if you are unable to make your payment, contact your loan servicer. They will work with you because they donít want to see you default on your loan and jeopardize your future credit. You may be eligible to apply for an economic hardship deferment or a forbearance. By temporarily postponing your payments until you are able to resume your repayment, your loan will not be considered delinquent. Interest will still accrue, but you are being allowed some extra time to get back on your feet.

 

If you are not sure who your loan servicer is, go here.

 

What is  Loan Consolidation?

Go here for more information.


Remember . . .

donít live a lifestyle you canít afford while you are in school. Make well-informed choices and live below your means. Learn to stretch your dollars while you are a student, so that you can afford to live like a professional once you graduate.