• All About Direct Loans
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• Direct PLUS Loan Guide
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• Student Loans Driving You Crazy?
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• The Inside Scoop For Borrowers
  Master Promissory Note Questions & Answers
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Borrowing Responsibly-How Much Is Too Much?
Even when the economy looks good it could change drastically by the time you graduate! Just a few years ago the job market was extremely competitive. New graduates found themselves fresh out of school and head to head with highly skilled workers who wanted the same jobs.  As a result of this, many wound up in miserable low pay positions and unable to repay their college loans.  This can happen again.  Believe it.

But you may be able to avoid this plight through a little research and planning.  Before you borrow, find out what your monthly payments will be. Check out the The Student Loan Calculator which tells prospective borrowers their estimated monthly payments and the total cost of borrowing the money. To cut down costs even further, consider taking your first two years at a community college and then transferring to a four year school.

Also check out the Dept Of Labor Occupational Handbook. The Handbook  lists the average salaries in each occupation and the fields which will be most in demand.  If you have firm career goals, you can use this guide to plan how much to borrow based on an estimate of your potential earnings.  Keep in mind that college freshmen may change majors and often have no specific career plans.  So if you're the wishy washy type, play it smart and work part time to avoid student loans. 

Also, check to see if your college offers a work-study program.  If you qualify, you could get a job right on campus, earn some money and avoid loans you're sure to regret later. 

One final word of warning: Don't believe the hype put out by college career offices about how easy it is to get hired. And no matter what they tell you, don't be fooled into taking out more loans. Remember it's their job to make the college look good.  Don't expect them to level with you about your earning potential, especially when times are tough.

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Avoiding Late Payments

Making late payments on monthly installments can really cost you. Some lenders such as South West Student Services, now assess a 6% penalty on all delinquent accounts.  Thus, a debtor owing $800 for being two months late will now have to fork up an extra $48 in addition to the $800.  If the debt becomes three months late, the amount skyrockets to $72.00!  And Now, borrowers who make partial payments are still penalized for 6% of the full amount due for that month!  So if you pay $398 of your $400 monthly installment, your late fee will be 6% of $400, not 6% of $2.00.

While making prompt payments can avoid this problem, for some people this is not an option.  If you live from paycheck to paycheck and find yourself always missing the deadline by a few days, consider the following: 

Some lenders (including South West Student Services) permit you to make monthly payments directly from your bank account.  This instant funds transfer eliminates mailing delays and makes it easier for you to avoid late payment fees.  Wiring money under this arrangement can cost as little as $3.25.  But keep in mind that while they post the payment to your account immediately, it still may take a few days for them to debit your bank account. 

Ask your lender if they allow electronic transfers and the steps you must follow.  Usually, all you need do is call their special number, read off the numbers on the face of your check and tell them the check amount.  You should then void the check and keep it for your records.  Your lender will take care of the rest.

Late payments can severely hurt your credit, especially when you're more than two months delinquent.  To protect your credit, play it safe and at the slightest sign of trouble file for a hardship deferment or forbearance. Never gamble on the money coming in before hand unless you're absolutely sure it will do so. Things can and often do go wrong.  And a single miscalculation can be disastrous.  It's better to get the deferment first-you can always change your mind and begin making payments if your money arrives on time.  This protects your credit, which you'll need for renting an apartment, or buying the car or house you've always dreamed of.