Part of understanding financial aid is having a basic understanding of financial literacy, such as budgeting, interest rates, identity theft, and other issues that students can encounter throughout their cadetship. There are three components to financial literacy, budgeting, borrowing, and repayment.
A budget is a compass that enables a person to stay on the path to reach financial goals. It’s an invaluable tool to help you prioritize your spending and manage your money.
Student borrowers should understand the general terminology of the student loan process and gain some basic understanding of the related concepts listed below:
- Loan types - federal vs. private
- Subsidized vs. Unsubsidized loans
- Determining how much to borrow
- Borrowing and credit
- How current borrowing affects future credit
- Impacts on credit score
Repayment of education loans kicks in once a student drops below half-time attendance or graduates from college. Student borrowers should understand the following concepts:
- Repayment plan options beyond the standard repayment plan, such as Income-Based Repayment and Pay-As-You-Earn
- Know how a loan grace period works
- Know the name and contact information of loan servicer(s)
- Know the role of the loan servicer(s)
- Repayment Options