Financial Literacy
Financial Literacy is understanding how money works and how to make informed and effective choices with your money.
Most of us have questions about money and student loan repayment. The information below can assist you with repayment and help you make sound decisions with money.
Financial Aid Video Playlist
Have financial aid questions? Visit PNW’s video portal to find answers, from understanding your financial aid offer to the difference between grants and loans.
Understanding Student Loan Repayment
Learn about federal student loan repayment based on where you are in the process.
Student Loans and Repayment
A Federal Student Aid survey asked students about entering repayment and what they would do differently when borrowing student loans. Some of their responses are shown below:
“If I could do it all over again…
- I would begin paying my loans during my studies
- I would have taken all subsidized loans and no unsubsidized ones
- I would have taken out just enough and not the maximum amount
- I would pay interest as I went
- Rethink how to spend my loan
- Take more classes per semester to cut down on cost
- I would borrow less, have a better understanding of loan repayment options, and not accept refund checks to make my loan smaller
- Find out exactly how much I am borrowing”
These responses show that students would approach loan borrowing differently.
Use this information to make informed decisions about your student loans. Federal student loans used to pay for your college education can be an investment in your future. Follow the advice of other students to get the best return on investment possible:
- Start making interest payments if you are able
- Take out only subsidized loans if offered to you
- Borrow only what you need
- Take advantage of banded tuition and take a higher credit hour load each term
- Know the amount you are borrowing and know your federal loan servicer
Be wary of third-party companies promising to consolidate or eliminate your student loan debt through loan forgiveness programs. Work directly with your federal loan servicer.
Financial Literacy Resources
Understanding Your Federal Loan Status
Navigating loan repayment can seem overwhelming. Understanding the status and stages of your federal student loans makes understanding repayment easier.
Once you accept your federal student loan, it is important to understand your loan status and what action steps you can take.
In School
While you are enrolled at least half-time (six credit hours for undergraduate students and four credit hours for most graduate students) you are not required to make any payments on your Federal Direct loans. You may make early payments on your loans as well as interest payments on your unsubsidized loans.
Action Steps
- Determine your federal loan servicer
- Open an account with your loan servicer and keep contact information current
- Make interest payments if possible and/or begin making payments early
- If you are unable to make monthly interest payments consider making one payment to understand how the process works.
Grace Period
Most Federal Direct loans have a six month grace period after you are no longer enrolled at least half-time in school. Repayment of your loans begins after the grace period expires.
- You receive one grace period for each loan, once you use the grace period it is gone
- This may mean you could go into repayment immediately on some loans and still have a grace period on other loans
Example
Jessica decides to work for one semester and does not enroll in the spring after being continuously enrolled at least half-time each fall and spring.
- Enrolled year one; fall and spring semesters
- Enrolled year two; fall semester only
- Not enrolled year two; spring semester
- Enrolled again year three; fall and spring semesters
Since Jessica was not enrolled at least half-time for over six months during her year two spring semester, she has lost her grace period on any loans up to this point. Jessica enrolls full-time in her third year beginning in the fall and stays enrolled each fall and spring semester until graduation. Jessica will have a grace period for any loans received after returning to school, but will have lost grace on the loans taken before year three.
Action Steps
- Contact your federal loan servicer to let them know you are out of school
- Give your loan servicer your current contact information (address, phone number and email)
- Research the different repayment plans (see below)
Repayment
Repayment begins once your grace period has expired and continues until the loan is paid in full. You will make payments to your loan servicer; each loan servicer may have a different process so check with your servicer if you aren’t sure how or when to make a payment.
Action Steps
- Select your repayment plan
- Sign up for automatic debit (you may qualify for an interest rate reduction)
- If you have difficulty with your payments, contact your loan servicer immediately to discuss your options and avoid delinquency or default
- If you haven’t finished your degree, consider enrolling half-time (at least 6 credit hours) to qualify for an in-school deferment
Federal Student Aid has an overview of the different types of available Repayment Plans available. Work with your federal loan servicer to choose your payment plan. Keep in mind that longer repayment plans may result in you paying more than under the 10-year Standard Repayment Plan.
Deferment and Forbearance
If you are unable to make full payments on your loan you may qualify for a deferment or forbearance for your federal student loans if you meet certain criteria. Deferments and/or forbearance are tools that may be available to you in order to avoid delinquency and default.
- Deferment temporarily postpones payments on a loan.
- Forbearance temporarily suspends or reduces payments on a loan
Delinquency and Default
Missing payments or not making payments on your student loans will result in delinquency and possibly default. Avoid default and delinquency by contacting your loan servicer immediately. Default has severe consequences including:
- Demand of immediate payment for the entire unpaid balance of your loans
- Loss of eligibility for deferment, forbearance and repayment plans
- Loss of eligibility for additional federal student aid
- Your loan(s) account is sent to collections
- Your loan(s) will be reported to the credit bureaus
- Your federal and state tax refunds may be confiscated
- Your employer may withhold money from your paycheck (wage garnishment)
Financial Aid Resources
These resources can answer common questions and make navigating the financial aid process easier.
Use the resources listed below to assist you with college planning and student loans.
- U.S. Department of Labor’s Occupational Outlook Handbook
- 15 to Finish – Graduating On Time
- Paying for College – Consumer Financial Protection Bureau (CFPB) information on financial offers, loans and more
- ISM College Planning promotes educated decision making for higher education choices to students, families and counselors
- MyMoney.gov is the U.S. government’s website dedicated to teaching all Americans the basics of finance and money
- The mintGRAD guides you to be money smart and financially fit
- 360 Degrees of Financial Literacy is a Free Program of the nation’s certified public accountants to help Americans understand their personal finances through every stage of life