Paying for college

Tips for managing student loan debt

• You have a choice between federal and private loans. Federal loans tend to be the better choice due to the fixed interest rate and the availability of income-based repayment programs. Interest rates for private loans are often variable and can increase over time. For an in-depth comparison of federal and private loans, visit the Consumer Financial Protection Bureau’s website.
• Remember: Student loan interest accumulates. Only borrow the amount you absolutely need.
• Start making interest payments while you’re still in college, if you can. It cuts the amount you’ll owe – and that interest accrues on – once you graduate.
• Avoid scholarship scams and debt collection scams that steal your money.  
• Max out your federal student aid before you turn to private loans. If you take out private loans, carefully shop for and compare terms and costs.  The lower the APR, the easier a loan will be to repay.
• Avoid consolidating federal loans with private loans. It can strip away protections built into federal loans.
• Use student loan calculators. Online student loan calculators can help you compare loans and also keep track of what kind of payments you’ll need to make when you graduate. Here are several calculators you can try:
  • Federal Student Aid 
  • The New York Times 
  • FinAid
• Read your statements and track your payments carefully. Keep a written record of everything in case you need to dispute a statement. If you have a problem with your loan servicer, file a complaint with the Consumer Financial Protection Bureau

Resources to help you select and pay off loans:

• College Now Greater Cleveland provides online resources and in-person counseling to help you compare college costs, find scholarships, and select and repay student loans.
• The U.S. Department of Education’s Federal Student Aid site provides helpful information on selecting and paying off loans. It also has information on programs that can help borrowers who are struggling with loan repayment. 
• The U.S. Consumer Financial Protection Bureau’s Paying for College resources help you compare school costs, aid offers and loans. The CFPB regulates student loan servicers and can help you resolve disputes about your loans or loan payments.
• Read this CFPB blog post on resources for student loan borrowers. Also check out its helpful tips and tools for paying off both federal and private student loans.
• The Institute for College Access & Success has helpful information for student loan borrower on its Resources for Borrowers page. 
• The Federal Trade Commission offers some helpful materials on student loan debt relief.

College scholarship and financial aid scams

These tips will help you learn to spot and avoid financial aid scams aimed at students.  

Common warning signs of financial aid scams:

• You have to pay a fee just to search or apply for scholarships
• A company asks you for for credit card or bank account information in order to hold a scholarship
• High-pressure sales tactics rushing you to sign off on receiving aid (e.g. “This is a limited time offer.”)
• Receiving notice you were awarded a scholarship you never applied for
• Financial aid services that avoid your questions
• Grandiose promises that you’re guaranteed a scholarship just for signing up for the service

How do you avoid a financial aid scam?

• Do not provide any personal (Federal Student Aid PIN, Social Security Number, etc.) information over phone, email, in person, or through an unprotected website.
• If you’re attending a financial aid seminar, research the company organizing it.
• Take time to research your financial aid providers. Even if mailings and other print materials include a Department of Education seal, it isn’t necessarily government-approved. Scammers sometimes pose as official agencies to trick people. 

How to find legitimate help paying for college:

• Visit StudentAid.gov.
• Complete the FAFSA, which can help you qualify for scholarships and aid at a number of different colleges. College Now Greater Cleveland lists a variety of scholarships available to high school, undergraduate, undocumented, adult learner, technical & vocational, graduate and PhD students. 
• Contact your school’s (or your prospective school’s) financial aid office. Their counselors can help.

College loan repayment and debt collection scams

Scammers often prey on people’s anxiety about paying off debts – and new graduates who owe on student loans can be targets for these scams.

Here’s what you need to know to avoid these kinds of scams.

• Know your loan servicer and keep track of what you owe and what you need to pay. You can find out how to pay off federal loans through the U.S. Department of Education’s site.
• Do not provide money or personal information to callers or emailers who say they can help you get your loans forgiven – for a fee. They are scammers.  
• Don’t be rattled by debt collection calls or threatening emails saying you missed payments. Many scammers scare victims into acting first, before they have time to think. If you suspect you might be behind on payments, contact your servicer.
• Avoid any company that uses high-pressure sales tactics (such as rushing you to commit to a debt relief plan).
• Never share your Federal Student Aid PIN with anyone except your servicer. Always contact your servicer through its website.

If you’re struggling to pay on your student loans:

• Get smart advice on managing loans from the U.S. Consumer Financial Protection Bureau.
• Consolidate your federal loans for free by visiting StudentLoans.gov.
• Consider altering your payments with an income-based plan. Visit StudentLoans.gov.
• If you have private loans and you’re unable to make monthly minimum payments, contact your servicer and ask what options are available.
• The National Consumer Law Center’s Student Loan Borrower Assistance site has helpful information for borrowers who are struggling to repay student loans or in default.