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Managing Your Student Loan Debt

1. Consider student loans only after all sources of free financial aid have been considered and researched.
2. Consider the loan programs available to you and your parents. Federal loan programs available through Whitworth University include:
   1. Federal Direct Loans
   2. Federal Perkins Loans
3. Plan an in-school and after-school budget before taking out your first student loan.
4. Manage student loan debt by deciding how much you can afford to borrow and how much you can realistically repay.
5. Estimate the student loan payment you will be expected to repay each month.
6. Establish a good credit history by repaying your student loan on time.
7. Contact your lender about any changes that may affect repayment of your loan. These changes may include transferring to another school, changing your name or address, leaving school, or graduating.
8. Consider deferments or forbearances if a situation occurs that requires you to temporarily suspend your payments. Research loan forgiveness, cancellation, and discharge options.
9. Consider Federal Consolidation Loans if you want to consolidate several loans into one.
   Click here for information regarding Consolidation of Perkins Loan.
10. Understand the consequences of a student loan default.

Default Consequences

• Loan acceleration
• Lose rights to deferment/cancellation
• Lose rights to future financial aid
• Credit damaged
• Legal action taken
• Income Tax refund withheld
• Collection action/costs

Credit: Friend or Foe?
Used wisely, credit can be an extremely useful financial tool. But, it can also be your worst enemy.

According to financial experts, most Americans are in debt to the point where a financial crisis could put them over the edge. Yet credit use continues to go up.

Getting out of debt is the first step to financial survival.

You know you are in debt trouble if you...

• Have debt payments that exceed 33 percent to 40 percent of your gross income
• Pay only the minimum due on accounts
• Use one credit card to make payments on the other ones
• Notice your loan balances are staying about the same--or are creeping upward from month to month
• Put off paying one bill to pay another
• Are past due with basic living expenses, such as rent and utilities
• Apply for additional credit cards because you have reached your limit on the ones you currently carry
• Take advances on paychecks or depend on extra income, such as overtime
• Use credit or tap your savings to cover everyday living expenses
• Avoid the mail
• Worry about your debts

If two or more of these statements describe your situation, it is time to do something about your credit.

Developing a Spending Plan
The term "budget" generally brings to mind a feeling of negativity: money problems, financial discipline, guilt about spending money, "I am over my head in debt." Therefore, we will use the term "spending plan" which is a more positive way to look at a plan for adjusting expenses to meet income.

Reasons to Develop a "Spending Plan"

• To get the maximum benefit from your income
• To prevent waste of money
• To reduce money worries and frustration
• To have money available in case of an emergency
• To plan savings and realize future goals
• To achieve financial competence and confidence

Characteristics of a Good "Spending Plan"?

• A guide
• Personal and unique
• Practical and realistic
• Flexible
• Positive and forward thinking

Six Steps to Good Financial Planning

Step 1: Set Goals to Distinguish Needs versus Wants
You need to:

• Do honest self-analysis and evaluation
• Prioritize goals
• Eliminate unreachable goals
• Put a cost and target date on each of the remaining goals
• Pick the top 3-5 goals to begin working on (one should be attainable in 2-3 weeks)
• Make a list of the planned spending changes
• Create a monthly budget and frequently evaluate it

Step 2: Record Income from ALL Sources and Use Net Income Only

Step 3: Project and Track Expenditures

• Fixed monthly expenses
• Variable monthly expenses
• Periodic monthly expenses
• Track your spending by writing down everything you spend money on and the amount spent, for a period of two weeks to one month

Tracking will help you to do three things:

• Find out how much you are spending
• Find out what you are spending it on
• Allow you to make choices and changes

Step 4: Record Monthly Debts

• House payments or rent
• Car payments
• Credit cards
• Secured loans
• Medical bills
• IRS debts
• Student loans
• Personal debts owed to friends and family.

Step 5: Tally The Results

Total Monthly Income minus Total Monthly Expenses = Monthly Balance

Step 6: Follow the Plan with Determination

• No one is born with the ability to manage money effectively
• Track expenditures for 30 days
• Most expenditures are easy to track

Expenses involving discretionary spending are the only ones that require real effort.

Change is not always easy, especially when it means changing something you truly do not want to change.

If you manage your money, it will not manage you.