Debt Management – Student Loan Basics

Before taking out a loan, it’s crucial to assess your borrowing capacity and devise a plan for managing your debt once repayment begins. Exploring alternative financial aid avenues, such as scholarships, is recommended before resorting to borrowing. Determining a manageable debt level hinges on two key factors: the amount you borrow and your anticipated post-graduation earnings.

A general guideline suggests that your maximum student loan payment should not surpass 10% of your gross first-year salary. Planning ahead safeguards against the severe repercussions of defaulting on loan payments, including adverse effects on your credit score, loss of repayment options, and potential wage garnishment. Careful budgeting and borrowing only what’s necessary are essential practices, as increasing loan payments will also inflate your loan balance.

Information on graduated and income-sensitive repayment options can be obtained from your lender, though it’s important to note that these figures are estimates. Specific inquiries regarding loan repayment should be directed to your lender. To identify your lender, you can visit StudentAid.gov. For questions related to Federal Direct Loans, students should visit StudentAid.gov. Federal law mandates the government to report loan information to credit bureaus, and borrowers have the right to restrict this information’s use in certain credit or insurance transactions by calling 1-888-567-8688, Option 2.

Last updated: 5/17/2024