How to manage student loan debt

Thanks to student loans and other financing options, a Grand Valley State University college education has become much more attainable for a wider array of students. Student loans may make it possible for millions of students to attend college when they otherwise could not afford tuition, but such loans also can put borrowers in financial hot water if they’re not careful.

Just like any other form of credit, a student loan is usually easy to spend but not as easily repaid. Add to that the fact that most educational loans do not require payment until after graduation, it could seem to a student that he or she is attending classes with no strings attached. Some students also use loans to finance their living arrangements and pay for their book, making it easy for loans to add up quickly.

Another potential pitfall of borrowing to finance your education is the uncertainty many people have with regard to the terms of their loans. Many people sign on the dotted line of their lending agreements without ever reading the fine print, which may dictate repayment terms and interest rates.

But students need not succumb to student loan debt shortly after they don their caps and gowns. The following are a few ways to avoid financial struggles that stem from student loans.

Learn your loans. Learning the terms of your loan is the first step to avoiding delinquency or default. Take the time to fully understand the type of loan you are receiving as well as when repayment begins and how much your monthly payments will be. Private lenders may back loans, but many student loans are issued through federal government programs. Each type of loan has its own set of regulations. It’s also important that you understand the details of loan forgiveness and what happens should you miss a payment.

Familiarize yourself with the loan repayment schedule. Every student loan comes with a grace period, or the time between when you graduate and when the first payment must be made. Grace periods typically range between six and nine months for federal loans, while privately issued loans may have a different grace period. If you have yet to secure steady employment when your first payment comes due, contact your lender to see if payments can be deferred a little longer.

Negotiate payment options. Some lenders simply follow a standard formula for determining a repayment schedule, which typically lasts 10 years. If that payment amount or schedule seems unattainable, consider speaking with the lender about changing your payments. Repaying the loan over a longer period of time will lower your monthly payments but result in you paying more interest over the life of the loan. If you find you have extra money on hand, make larger payments toward the loan and ask that this money be applied to the principal. Paying down the principal can significantly reduce the loan and reduce the interest you’re paying as well.

Choose an employer wisely. According to The Project on Student Debt, some jobs offer loan forgiveness. After 10 years of qualifying payments for people in government, nonprofit and other public service jobs, loans may be written off. There are additional federal loan forgiveness options available to teachers, nurses, AmeriCorps and Peace Corps volunteers, as well as some state, school and private programs.

Don’t ignore problems. If you are falling behind on your loan payments, take action right away. Doing something is better than doing nothing at all. An inability to repay your student loan debt can cause problems later in life, so don’t allow the problem to snowball before you do anything about it.

Use campus resources while you can. The GVSU Financial Aid Office is more than willing to help any soon-to-be-graduating student with questions regarding repaying loans. Visit this website for more information: www.gvsu.edu/financialaid/.

Financial considerations for adults mulling a return to school

Many individuals, such as those getting ready to graduate from Grand Valley State University, who find themselves out of work or unsatisfied by their current profession or level of experience consider going back to school to pursue an advanced degree or to begin studies in an entirely new field. An advanced degree can help men and women further their careers, while changing careers is often facilitated by a degree in a different course of study. The decision to return to school involves more than a person’s career goals, especially if that person has a family or other significant financial obligations. The cost of a college education is considerable, but men and women can take steps prior to enrolling to determine if returning to school or continuing their education at graduate school makes financial sense for them.

Where will the money come from?

Determining the cost of graduate school is not easy, as tuition varies greatly depending on a student’s course of study. Public graduate schools are typically more affordable than private schools, but tuition will be expensive regardless of the university. Even adults who don’t want to pursue a graduate degree but a new field of study entirely should expect tuition to be substantially higher than it was when they were students years ago.

Adults must decide from where the money for their continued education is going to come. Paying out of your own pocket will require some sacrifices in other areas of your life and could also deplete your personal savings. Financial aid, grants and private loans are other options, and each of these should be thoroughly explored before making a final decision.

Are you eligible for aid?

If you are thinking of going back to school, you may be eligible for financial aid. Older students returning to school won’t have to worry about their parents’ income disqualifying them from financial aid, and they may even be more eligible for need-based aid when returning to school than they were when they initially enrolled as young students. Older independent students may also be allowed to borrow more than younger students who are considered dependent. Rules regarding eligibility for financial aid vary depending on where a person lives. Visit www.fafsa.ed.gov for more information.

Are you able to discuss financial aid with the university you plan to attend?

Unlike high school students who apply to multiple colleges, adults going back to school typically value proximity when looking for a college or university in which to enroll. It’s easy for adults to visit their local college or university’s financial aid office in person to discuss opportunities for grants or scholarships. Financial aid officers can point you in the right direction if you decide to fill out loan applications or help you find any scholarships that might be available to returning students. Financial aid departments are valuable resources for students of all ages, and gaining a greater understanding of the grants and scholarships available to you can help you determine if returning to school makes financial sense for you and your family.

How quickly can you repay student loans?

Few students can afford to attend college without borrowing money. While younger students have a lifetime to repay student loans, older students don’t have that luxury. As a result, older students must determine when they can realistically expect to pay off their loans before they borrow any money. If loans can be repaid long before retirement, then a return to school might make financial sense. But men and women who crunch the numbers and realize they will be forced to make loan payments during their retirement years might want to reconsider. A good rule of thumb for adults considering a return to school is to borrow less the closer you are to retirement.

Will your employer help pay?

If you are employed and want to continue that career, it’s quite possible your employer will help pay your tuition. Employer-funded tuition programs might earn your employer a tax deduction, so don’t just assume your employer won’t help cover some of the bill for your education. Some employers who help pay their employee’s tuition will ask an employee to commit to the company for a certain number of years after they have earned their degree, while others will only provide assistance to employees who are not training for another career.

Find the best bank for you

After graduating, many Grand Valley State University students will move to other areas of the state, country or even the world. Finding the right bank in a new location is often an important thing to think about. Some people may not give much thought to where they do their banking, but much like no two account holders are the same, no two banks are the same either. That reality only highlights the importance men and women must place on finding a bank that best suits their particular needs.

Individuals hoping to find the best bank for their needs may consider a host of factors before deciding just where it is they will be depositing their money in the years to come.

Accessibility: This is many individuals’ biggest priority when it comes to finding a bank. Large banks, such as Bank of America and Fifth Third Bank, tend to have more local branches and ATMs, and such banks tend to be in more regions of the country as well. Men and women who travel for business or even underclassmen who go to school away from home may want to find a bank with a more national presence, as that can make it easier to deposit and withdraw money. If you don’t travel much and only seem to withdraw money within your community, then a smaller, local bank, which should be able to offer the same direct deposit services as its larger competitors, may be what you’re looking for. The Lake Michigan Credit Union, located in Allendale, may be the bank for some GVSU students to use while attending college. To learn more, visit www.lmcu.org/.

Capability: Some people prefer to have all of their financial needs catered to by the same bank. This means a bank that can manage your investments, provide a line of credit and secure home, vehicle or education loans. Larger banks tend to offer the widest array of services, and such banks also may have more advanced technology that makes it easier to manage all of your accounts. Smaller banks may be just as versatile with regard to their capabilities, so don’t judge a book by its cover.

Balances: Banks typically require account holders maintain a minimum balance on both their checking and savings accounts. If you think it may be difficult for you to maintain a higher balance, find a bank that offers accounts with a low minimum balance so you don’t end up paying penalties just to spend your own money.

Fees: Even accounts that are advertised as “free” tend to come with fees that are listed in the fine print. For example, a “free” checking account may only be free if account holders maintain a minimum balance of $1,000 or more. Should that balance dip below the predetermined minimum, account holders are then subject to costly fees. Overdraft fees, in which account holders are charged a substantial fee if they do not have enough money in their accounts to cover their purchases, are another potentially costly problem for men and women who are not accustomed to monitoring their balances closely. Before opening an account, learn if there are any fees associated with it, and what’s the best way to avoid paying those fees, such as using only ATMs affiliated with your bank or purchasing overdraft protection that covers you in the case of an overdraft.

Choosing a bank is an important decision, and identifying your needs is a great way to make the best decision possible. 

Why it pays to graduate

The Grand Valley State University graduation ceremony, GradFest and other events that mark the end of a school year are rife with tradition. Students know it is important to receive their diplomas but may not have a full understanding of why that piece of paper can help open so many doors.

Diplomas date back to some of the earliest schools, but were also conferred upon landowners in ancient times by kings and other authority figures. Some military personnel were also given diplomas to signal land grants that were not subject to taxes. Nowadays diplomas take on a different meaning and vary depending on where one lives in the world.

According to the organization Do Something, roughly 20 percent of first-time college students come from parents who have a high school diploma or less. The United States Department of Education says high school graduation rates have increased since the 2006-2007 school year. Around 80 percent of students who enter high school now earn a regular or advanced diploma. Dropout rates are on the decline, and a growing number of high school students continue on to two- or four-year degrees.

The reason so many students continue to apply themselves and come out after four or more years with diplomas and degrees is that they realize how competitive the job market can be. Graduates have a distinct advantage over other candidates. Some companies will not even consider a job candidate who does not possess some college education. Other employers pay more depending on the level of education the job candidates completed.

According to the United States Department of Labor, employees with a bachelor’s degree earn about 54 percent more on average than those who attended college but didn’t finish. Workers with advanced degrees (master’s, doctoral, etc.) can average $20,000 to $30,000 more per year than those with bachelor’s degrees, according to the U.S. Census Bureau.

Some students, however, will insist that failure to have a diploma isn’t a barrier to success. For example, Richard Branson, the billionaire entrepreneur who owns Virgin Group, did not graduate high school. But such people are an aberration. Typically, earning a high school diploma and a bachelor’s degree is a key ingredient to landing a good job and enjoying professional success.