Debt Management
Taking Charge of Your Financial Future
Learn how to manage your student loan debt. Borrowing for a Creighton University education carries serious responsibilities. Students who wait to cross that repayment “bridge” 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. This information is provided by the Creighton University Financial Aid Office to assist students in making informed borrowing decisions. Please contact us if you have questions, comments or need additional information.
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. Don’t say, “Student loan repayment? I’ll cross that bridge when I come to it.” 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.
- Know which lender you borrow from and stay in touch with your lender!
- The 2002 CU Senior Survey indicated that 37% of graduates intended to pursue 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 lender or 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 Programs page for information on the Federal Perkins, Stafford (subsidized and unsubsidized), PLUS loans, and alternative loans. Remember, all Stafford and PLUS loans may have up to 4% origination and guarantee fees withheld from each disbursement. These fees are withheld by the lender/servicer.
How do I know which lender to use?
The Financial Aid Office will send an award notification indicating your loan eligibility and a list of preferred lenders. Preferred lenders are experienced student loan lenders that disburse loan proceeds to Creighton University electronically to ensure you get your funds promptly. They also save you money once you enter repayment by reducing the interest rate for automatic payment or if you meet on-time payment requirements.
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. Build a budget each year you are in school. Look at your:
Resources:
Savings | |
Income from Earnings | |
Help from Parents and Family | |
Scholarships | |
Loans (less origination fees) | |
TOTAL RESOURCES |
Expenses:
Tuition | |
Books/Supplies | |
On Campus Room/Board | |
Off Campus Rent | |
Utilities | |
Telephone | |
Insurance | |
Groceries | |
Car Payment | |
Clothes | |
Credit Card Payment | |
Entertainment | |
Other Payment | |
TOTAL EXPENSES |
Will your resources cover your expenses? What expenses can you eliminate? If your resources don’t cover your expenses, it’s time to set priorities. You may need to adjust your lifestyle to accommodate new obligations. Question every purchase, “Do I really need this right now?” The use of loans should be contained to necessary educational costs
Credit Cards
- Recent studies show that the majority of students use at least one credit card while in school. They are convenient to use, but sometimes can get you into trouble. All private lenders issuing alternative loans will require a credit check. Therefore you will want your credit report to be as clean as possible. Here are some helpful hints:
- Absence of credit is not considered to be negative credit, but you may want to apply for a credit card, charge a small balance, and then take 2 or 3 months to pay the balance to establish a good payment history.
- Use only one card.
- Once credit is established, pay off your balance each month. If you are unable to pay the entire balance, always make more than the minimum payment.
- Close out inactive cards. Cutting them up or no longer using them will keep your account open until you notify the credit card company to close them.
- Take steps to clean up inaccurate information: Call a national credit bureau for a copy of your credit report:
Experian: 1-888-397-3742
CBI/Equifax: 1-800-759-5979
TransUnion: 1-800-888-4213
Use credit cards cautiously. Your credit report is like a financial transcript. While your academic transcript indicates your academic success, your financial transcript is just as important to your future financial success.
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. You have some choices to make regarding the type of payment plan you would like to use:
- Standard Repayment Plan. Under this plan, your payment will remain the same over the entire 10-year repayment period. This plan is the most economical.
- Graduated Repayment Plan. This plan begins with smaller payments followed by a gradual increase in payments at specified intervals. You will pay more interest with this plan over the ten year repayment period.
- Income-Sensitive Repayment Plan. This plan ties the size of your payment to your income level with adjustments made annually. Like the graduated payment plan, the time frame is 10 years, resulting in more interest paid over the life of the loan.
- Loan Consolidation. If you have a number of Federal student loans with several lenders or just an extremely high balance, you may find it more manageable to make a smaller payment over a longer period of time (up to 30 years). You will pay much more interest with this plan.
- Prepayment. By making early payments or extra principle payments, there is no penalty. You will greatly reduce the amount of interest you will pay.
- Loan Calculator. Many lenders will have a loan calculator tool or payment estimator on their web page. By accessing the web page, you can estimate your borrowing and then project your future payments. The EducationQuest foundation and the National Student Loan Program also have helpful web sites.
If your lender is: | Go to: |
| |
Wells Fargo | |
Access | |
Wachovia |
Standard Repayment Schedule
This schedule assumes a maximum interest rate of 8.25% and does not include interest that may have been capitalized.
Principal Amount | Monthly Payment | Total Interest Paid |
$5,000 | $67 | $2,595 |
10,000 | $123 | $4,718 |
$15,000 | $184 | $7,077 |
$20,000 | $245 | $9,437 |
30,000 | $368 | $14,155 |
$40,000 | $491 | $18,873 |
50,000 | $613 | $23,592 |
60,000 | $736 | 28,310 |
70,000 | $859 | 33,028 |
80,000 | $981 | $37,747 |
90,000 | $1,104 | 42,465 |
100,000 | 1,227 | $47,183 |
120,000 | $1,472 | $56,620 |
140,000 | $1,717 | $66,056 |
As a general rule, you may estimate your monthly payment to be $125.00 per month for every $10,000 you borrow.
Be aware of interest capitalization
For unsubsidized loans, the lender will generally add the accumulated 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 can’t repay my loan?
For whatever reason, if you are unable to make your payment, contact your lender or servicer. They will work with you because they don’t 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.
Is borrowing worth it?
In a recent survey conducted by NELLIE MAE, a provider of education loan funds, borrowers were asked if the amount of loans they took out to achieve their degree was worth it. The majority responded “yes.” Without student loans, many borrowers believe they could not have earned their degree and obtained the professional employment they were seeking. While repaying student loans may be unpleasant, the majority of respondents stated the benefits are well worth it.
I have received so much mail about my loan, I don’t know who to contact.
That’s why you need to read all mail you receive. Most statements or correspondence will list toll free numbers or web site information The lender who first disbursed your loan may contract with a servicer to perform the collection activities or they may sell the loan to a secondary market who then becomes the holder of the loan. Regardless of the holder of your loan, the terms will not change from the promissory note you signed when you first took out your loan. It can be confusing because of the different players involved over the life of your loan. If you need further clarification, don’t hesitate to call the Financial Aid Office.