Students | 2Futuro

Prepare for college

If you are considering pursuing higher education, it is important to assess your needs and goals. We have collected the following information to help you do just that.

Select a college

Learn how to identify what you are looking for in a school and choose schools that will meet your education and career goals

Apply for college

Applying to college can be a stressful experience if you are not prepared. Once you understand the process, you will find it is easier to plan your time and organize your work to submit the strongest application packet possible.

Apply for financial aid

Are you planning and preparing for the financial responsibilities related to going-to-college?

The Sallie Mae Fund sponsors nationwide Paying for College Seminars to educate high school students and their parents on borrowing responsibly. Visit The Sallie Mae Fund to see when a seminar is coming to your community.

Find free money

Free money for college is available from a variety of sources and can come in the form of scholarships, grants, or military aid. Scholarships are an attractive way to pay for college because you do not need to repay the money.

The key to finding free money is to start early and search diligently. With some basic information, you'll be equipped to begin your search for free money.

Attend college

Before you sign for your education loan, consider our advice for cutting your costs of borrowing for college and for minimizing the amount of college debt you incur.

If an education loan is part of your financial-aid package, you can download a loan application.

If you already have applied for a loan, you can check the status of your loan request.

How to control student loan debt

Don't leave college with excess education debt. These tips may help you keep your student-loan debt affordable:

Borrow only what you need to cover the cost of education.
Pay the interest on education loans as it comes due.
Enroll in a tuition-payment plan, which lets you pay in installments rather than a lump sum. Check with your school to learn if it offers a tuition payment plan.
Budget to control expenses. Include out-of-pocket education costs as well as expenses for living, transportation, personal items and entertainment. Analyze where the money goes and determine ways to cut costs. Consider buying used textbooks, using public or school-provided transportation, eating out less, and finding a roommate to share expenses. Always ask yourself before buying: "Is this something I really need?" If you don't know, then you usually can skip the purchase.
Consider working part-time. Plan your work schedule so your academic work will not suffer. Investigate campus work-study opportunities. Start looking early, because work-study funds are first-come, first-served.
Determine how much education debt you can afford to repay by analyzing future earnings. Try to keep monthly education-loan payments to less than 8 to 10 percent of your gross monthly income.
Complete your degree on time. You will accumulate more education debt as you extend your school enrollment.
Keep a file of your education-loan documents and other financial-aid papers.

Cut the cost of borrowing for college

Here are items to consider to reduce the cost of borrowing for college:

No Loan Origination Fees. 2Futuro will waive the 3 percent origination fee on Federal Stafford Loans for any student who borrows with us during academic year 2006-2007. Zero origination fees will apply to unsubsidized and subsidized, graduate and undergraduate Stafford Loans that are originated by Sallie Mae's internal lending brands-Academic Management Services (AMS), Nellie Mae, Sallie Mae Education Trust, Southwest Student Services, Student Loan Finance Association and Student Loan Funding. This waiver applies to loans guaranteed on or after May 1, 2006.
In addition, students will remain eligible for a variety of unique repayment-status borrower benefit programs offered by Sallie Mae lenders, such as loan balance reductions for on-time payment, graduation and online account management. Furthermore, USA Funds waives the guarantee fee of as much as 1 percent that federal law permits guarantors to charge Stafford- and PLUS-loan borrowers.
Borrower benefits. Some lenders offer interest-saving borrower benefits. Typically, these benefits provide a reduction in the interest rate for borrowers who permit their loan payments to be deducted automatically from their bank account or consistently make on-time loan payments for several years.
Student-loan-interest deduction. You may qualify to deduct up to $2,500 of the education-loan interest that you paid during the tax year, subject to income limits and other restrictions. Recent tax-law changes enhance this student-loan interest deduction by eliminating the 60-month limit on deductible interest previously in effect and by permitting certain higher-income taxpayers to qualify for at least a partial deduction. You don't have to itemize deductions to claim the student-loan interest deduction; however, you must file Form 1040 or Form 1040A. If you're married, you must file jointly to claim the deduction.
Federal interest subsidy. Students who demonstrate economic need may qualify for subsidized Stafford loans. The federal government pays the interest that accrues on these loans while the borrower attends school, for six months after the borrower leaves school, and during periods when the borrower is authorized to defer loan payments. For an undergraduate student who borrows a total of $10,000 over four years of college, this subsidy could produce interest savings of more than $2,000. To determine their eligibility for subsidized Stafford loans and many other forms of financial aid, students must complete and file the Free Application for Federal Student Aid (FAFSA) by the date recommended by their respective schools

Repay loans

As you make your education-loan payments, consider interest-saving provisions that can help reduce your loan-repayment costs. As your personal circumstances change, you should review the repayment options available to you. To stay on course to pay off your loan, consider our repayment advice.

Certain teachers and child-care workers may qualify for loan forgiveness.

Loan repayment options

Federal Stafford- and PLUS-loan borrowers can choose from several flexible options for paying back their education loans:

Level repayment

Typically this is the least expensive option in terms of total interest costs. Also known as the standard repayment plan, most federal education-loan borrowers choose this option. This option provides a fixed monthly payment of at least $50 over a period of up to 10 years.

Graduated repayment

Monthly payments start low and increase over time. Graduated repayment may be a good choice for borrowers who currently have limited income but expect higher earnings in the future. Unless borrowers consolidate several federal education loans, the maximum repayment term under this option is 10 years. Total interest costs are higher under this option than with level repayment.

Income-sensitive repayment

Payments can be adjusted up or down annually to account for changes in a borrower's income. The minimum payment must be enough to cover accruing interest. The repayment period of 10 years can be extended to 15 years under a special forbearance provision. Total interest costs will be higher with this option than with level repayment.

Extended repayment

This relatively new option is available only to borrowers who did not have a balance on a Federal Family Education Loan Program (FFELP) loan as of Oct. 7, 1998, or at the time they received an FFELP loan after Oct. 7, 1998. In addition, extended repayment is available only to borrowers with outstanding education-loan balances of more than $30,000.

Under this plan, borrowers may reduce the amount of the monthly payment by spreading payments over a period of up to 25 years. Borrowers may choose to make payments over this extended period under a level or graduated schedule. Because payments are stretched over a longer term, total interest costs will be significantly higher than under the other repayment plans.

Loan consolidation

Consolidation permits borrowers to bundle all of their education loans into a convenient single monthly loan payment. Depending on their total outstanding loan balance, borrowers also may be able to extend their repayment period and lower their monthly payments by as much as half.

Loan consolidation is not the best choice for every borrower. Borrowers are likely to pay more total interest because they are extending your payment period and making smaller payments over a longer term.

Deferment and forbearance

Borrowers who are unable to make monthly payments should contact their loan servicer or loan holder as soon as possible. Borrowers may qualify for a deferment, which permits temporarily postponing payment of the loan. Or they may qualify for forbearance, which usually is granted at the discretion of the lender. In granting forbearance, a lender temporarily postpones payments, reduces the amount of payment, or extends the repayment period.

Questions?

Sallie Mae: (888) 272-5543 or www.salliemae.com.

Repayment advice

Student- and parent-borrowers can save money by following these tips for selecting an education-loan repayment plan.

Choose a plan that provides an affordable monthly payment but repays the loan in the shortest possible term. Extending the repayment period increases total interest costs.
In general, monthly student-loan payments should not exceed 8 to 10 percent of a borrower's gross monthly income. Borrowers whose monthly payments exceed this level should explore a flexible repayment option or loan consolidation.
Borrowers may prepay loan principal without penalty, thus reducing the total interest costs of their loans.
Many student-loan borrowers may reduce loan costs by having their monthly payments deducted automatically from their bank account and by consistently making their payments on time. Many lenders offer interest-rate discounts to borrowers who allow automatic debit of their payments and who have a history of on-time payment.