Giveaway for Educational Costs Approaches End

Iowa Student Loan’s most recent award program is coming to a close soon. The College Funding Forecaster Giveaway allowed Iowa high school students and their parents or guardians to enter drawings for awards after completing the online tool College Funding Forecaster.

Nearly 500 eligible registrants were entered into weekly drawings for two $250 awards for educational expenses. Over the course of the giveaway, $5,000 in weekly prizes were distributed to the drawing winners who completed the required steps to claim the prize.

High school 2017 graduates and their parents or guardians were also eligible to be entered into the grand prize drawing for two $1,500 scholarships to be paid directly to the winning student’s college in fall 2017. More than 400 registrants were eligible for that drawing, which will be conducted by an independent third party at the end of June. Winners will be notified in July, and the results will be published on the Iowa Student Loan website.

This was the first year for this giveaway, which encouraged Iowa families with college-bound students to use the free College Funding Forecaster tool to estimate total out-of-pocket expenses for a four-year undergraduate degree.

All Iowa Student Loan’s scholarships and programs play an important role in educating Iowa students and families about college planning and financing and in providing financial resources to help offset college costs. So far, nearly 17,000 students, parents and guardians from across the state have registered to receive valuable information, and more than 200 recipients have received more than $300,000 in awards.

Mark your calendar for the upcoming Save Now, Save Later: College Savings Plan Parent Giveaway, which opens near the beginning of the 2017–2018 school year.

By: Iowa Student Loan

How Making Interest Payments Can Save You Big Money Later

If you’re funding part of your college education with student loans, you may occasionally receive statements, even though no payments are due. Ever wonder why?

Those statements are important, and understanding why can save you money in the long run.

They notify you that, even though you don’t have to make payments while you’re in school, interest is adding up on your loans — every single day. If this interest is not paid as it accrues or before your loans enter repayment (usually six months after you leave school), it will be added to your principal balance. If it is added to your principal balance (a process called capitalization), you will then owe more than you originally borrowed. And, the now larger principal balance starts to accrue interest on a daily basis, so you will be paying interest on the accrued interest.

How can you minimize this increase to your loan balance? If you manage to earn or save some money while you’re in school, you can make monthly payments that pay down the interest as it accrues.

Here’s an example of how making small payments every month could save you more than $1,500 over the full life of student loans.

Note: The information below is an example only. Your payment amounts will depend on the types of loans you receive and the interest rates and the repayment terms on those loans.

Making-Interest-Payments-SaveYouMoney-infographic

Download a PDF of this infographic.

Establishing Financial Habits

Making everyday spending decisions—like whether to order pizza or go to the Caribbean for Spring Break—in college, helps you establish the financial habits you’ll use in the future.

Although eating out every Friday night sounds like a good thing, it may be worth it to give up that treat in exchange for savings of thousands on your future student loan payments.

By: Iowa Student Loan

A Monthly Budget Can Help You Repay Loans

Low on cash and wondering how you will start repaying your student loans?

Make and stick to a budget to make your monthly payments. Check out our budget calculator for more help.

If you are not out of school and in repayment, we have other calculators to help you succeed:

If you have trouble balancing your budget, check out these tips to reduce your spending:

By: Iowa Student Loan

Know Your Student Loan Servicer

KnowYourStudLnServicer

As you begin your life after college, you likely have several different responsibilities, from a new job to managing your own insurance and other activities. One important task is to get to know the servicer or servicers for your student loans.

What Is a Student Loan Servicer?

Your student loan servicer is the organization that handles customer service, including collecting and tracking your payments, for the loan. Depending on the number and type of your student loans, you may have one servicer or several.

Why Do I Need to Know Who My Servicer Is?

You need to be aware of your servicer for several reasons.

  1. You will soon need to start repaying your student loans, and you need to know where and when to send payment. You may also want to set up features, such as an online account and automatic withdrawals, that will help you manage your student loan payments.
  2. Your servicer can help you understand and choose from available payment plans. Most borrowers enter repayment under a standard payment plan that pays off the loan in equivalent monthly payments over the full term of the loan, but you may be able to choose a different plan that works better for your current situation. If you are entering the workforce at less than what you expected to earn, you may be able to make lower payments based on your income or according to a preset formula at first. If, on the other hand, you have the chance to make higher payments now before you have additional family, car and housing expenses, work with your servicer to determine the best way to pay down your debt.
  3. Your servicer may offer assistance if needed. If you don’t have or lose your income or you face another difficulty that makes student loan repayment challenging, you may be eligible to postpone payment. You will need to work with your servicer to understand your options and choose the one that works for you. Be aware that interest continues to accrue on student loans during repayment, and unpaid interest may capitalize, or be added to your principal balance, at the end of assistance. In certain cases, you may be eligible to have some or all your student loan debt forgiven, and your servicer can help with that as well.

How Do I Locate My Servicer?

Your servicer may be the entity that provided your loan or it may be a separate entity that acts on behalf of the current owner of the loan.

  1. Determine if you have federal student loans. Often called Stafford or Direct loans, these loans are provided by the federal government and were likely included in the financial aid package you received from the college you attended.
  2. Use your FSA ID to log in to the National Student Loan Data System. If you filed a Free Application for Federal Student Aid after May 2015, you probably created an FSA ID then. If it’s been some time since you filed a FAFSA, you may need to visit fsaid.ed.gov to create an ID. Then go to nslds.ed.gov to log in and view your federal loan information, including the servicer.
  3. If you have private student loans you obtained from a bank, credit union or other lender to pay remaining college costs after your financial aid, refer to the information your lender provided when you took out the loan and progressed through school. As the due date for your first payment approaches, you will likely receive communications from the lender or servicer about how to make your payment.

If you can’t locate a private student loan servicer, contact the entity that lent you the money or your financial aid office. You may also be able to see your lender or servicer name on your credit report (remember to access a free report at annualcreditreport.com).

By: Iowa Student Loan

Decision-Making Tips for Student Loan Debt

When available financial aid and federal student loans are not enough to cover the total college costs, many families turn to private student loans. These loans can be a useful way to cover the gap, but they are not all created equal.

When you are considering private student loan debt, use these decision-making tips.

Understand how student loan interest accrues.

  • Student loans accrue interest on a daily basis. Even if the borrower is not required to make payments while in school or for a period of time after leaving school, interest is accruing, so the repayment amount is more than the original loan amount.
  • Capitalization, or the addition of accrued interest to the principal balance, occurs in specific circumstances. According to the terms outlined by the loan’s credit agreement or promissory note, any unpaid interest will be added to the principal balance at specific times. When unpaid interest is added to the principal, interest begins to accrue on new balance, meaning that interest will be paid on interest.
  • Generally, payments are applied to any unpaid, outstanding interest with any remaining payment amount going toward principal. If a payment is not enough to cover all outstanding interest, the unpaid portion of interest is carried over to be paid by the next payment.
  • Increases to the loan balance may be prevented by payments that at least cover interest any time they are not required, such as while the borrower is in school. Most lenders allow prepayment of any amount without penalty.

Know your comfort level with interest rates.

  • Would you prefer a fixed or variable rate? A fixed rate is set for the life of the loan regardless of market conditions, helping ensure payment amounts remain constant. A variable rate may go up or down, sometimes dramatically, during the life of a loan, causing corresponding changes to payment amounts.
  • Is it important to know the interest rate before submitting the application? Some lenders provide only a range of available rates before the loan application is processed; others specify the criteria to receive specific rates. In either case, the borrower is able to decline a loan and reapply elsewhere if not satisfied with the rate received.

Be aware of fees and underwriting and credit criteria.

  • Read any information about what types of fees are assessed and when. Will an origination fee be charged when the loan is received? When do late fees kick in?
  • These fees are separate from the interest rate. An origination fee is a one-time expense; late fees are only assessed for payments made after the due date. Interest is charged on the balance of the loan until it is paid off. Compare the annual percentage rate (APR) between loans for a more accurate picture.
  • Some lenders publish more information about their underwriting and credit criteria than others do. If you are unable to find details about the types of borrowers who qualify for loans or specific rates, contact the lender for more information.

Some loans carry benefits for the borrower or cosigner.

  • Borrower benefits, such as a reduction in interest rate or the ability to release a cosigner from payment obligation, are sometimes earned by making a certain number of on-time payments, setting up automatic payments or another qualification.
  • Make sure you understand all eligibility requirements for benefits, including reasons for losing them. A payment received even a day late could be enough to end benefits.

Consider the broader picture.

  • Beyond the specifics of a particular loan, think about the lender. You or your student will likely be working with this lender for many years after leaving college while repaying the debt. Does the lender service its own loans, and does it have a good reputation for customer service?
  • Other considerations might be whether the lender is focused solely on student loans or is likely to try to market other items like credit cards to you or your student in the future, as well as whether the lender reinvests in the community through employment, nonprofit endeavors and education about student loan debt and products.

By: Iowa Student Loan