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Paying For College

Student loan debt totals more than $1.5 trillion.

This is more than than either credit card or auto loan debt, and second only to mortgage debt in the United States.

In North Carolina, more than 60 percent of students who graduate from a private or public school have student loan debt. The average student loan borrower in North Carolina owes more than $25,000.

One of Attorney General Josh Stein’s top priorities is protecting people’s hard-earned money. This means cracking down on fraudulent student loan relief groups; investigating for-profit colleges that scam families, target veterans, and cheat consumers; and making sure that students are treated fairly in how they choose and pay for higher education.

Learn more from our Attorney General below. 

What You Should Know Before You Borrow

Make a plan to know what you will owe before you borrow. Many people have to take out student loans. The most important thing is to be smart about the loans you take out.

Congratulations! You have made the decision to further your education and are beginning to look at various schools. Higher education is a major financial investment. It is important to know exactly what you are getting and what it will cost. The student loan process can be overwhelming at times. This information will help you navigate the process.

Know the difference between the various kinds of financial aid

Financial aid for school comes in several forms. For example, there are scholarships, grants, subsidized and unsubsidized loans, among others. All are different. Find more information about the different types of financial aid here.

Find out exactly how much each school will cost

Compare tuition, room and board expenses, and annual fees for each school you consider. If you receive grants or scholarships, subtract their total from overall cost of the school to find out the net price.

Use the student loan repayment calculator to find out how much your loans will cost per month after you graduate.

Know all your loan options

There are several types of student loans out there. Compare the terms, interest rates and repayment periods on each loan type before agreeing which to use and how much to borrow. In most cases, you should exhaust your federal loan options before taking out private loans.

    • Federal student loans are the most common and come directly from the U.S. government.
    • Private student loans are from private lenders, are often more expensive, normally require a credit check, and do not always offer the same flexible repayment plans as federal loans.

Know how much to borrow and don’t borrow more than you need

Never take out more in student loans than you absolutely need. Ask your college if they offer other options like work-study programs that can help reduce your debt load.

Ask your lender what the monthly payment will be before taking out the loans to see if it will be affordable. Or, use the student loan repayment calculator to figure it out yourself.

Plan how to pay tuition and living expenses

Undergraduate students who qualify are eligible to directly receive $5,500 to $12,500 a year in federal loans. Parents can also take out PLUS loans to cover the remaining cost of tuition, room and board. When borrowing PLUS loans, keep in mind what is affordable for your family.

Once you have received your loans, create a budget and plan how to pay your expenses. Track what you have, what you spend, and identify your financial goals.

Plan ahead for repayment

Make sure you know when your first payment will be due, what your interest rate will be, and how to contact your lender if you have questions.

Evaluate your school options like any other major investment

Meet with a financial aid officer at your school and ask specific questions. Find out to total cost of the school over the time period you will be enrolled.

Find out the average salary of people in your field of study, the percent of students who graduate and find jobs in your field, and how many students leave with debt.

Some for-profit schools have high tuition but low success rates in placing students in good paying jobs in their field of study.

Find out deadlines for financial aid applications, and what repayment plans are offered. Have them calculate exactly how much your monthly loan payments will be after grants and scholarships are applied to the total cost.

While In School

For college students, taking the time to learn how to be a smarter consumer now can pay off for years to come.

Learn how to manage student loan debt and avoid repayment scams. Find out how you can use credit and debit cards wisely. And learn how to reduce your risk of identity theft, both online and offline.

If you have a complaint about a student loan repayment scam, fear you’ve been a victim of identity theft, or spot a potential scam or bad business practice, file a complaint or call us toll free within North Carolina at 1-877-5-NO-SCAM.

Federal Work-Study

A great way to manage and pay off your student loans is through the Federal Work-Study program. Federal Work-Study provides part-time jobs for students with financial need. This allows you to earn money to help pay for you education expenses. The program encourages community service work and work related to your studies. Jobs are available both on and off campus.

Create a Budget

College is a great time to learn how to manage your finances. Create a budget. Track what you earn, what you spend, and identify your financial goals. A budget will help you avoid debt and missed payments that can hurt your credit and harm you down the road.

Be cautious with credit and debit cards

Check out credit cards carefully. Compare annual interest rates (APR) and fees to find the card that is best for you. Using a credit card wisely and paying it off on time each month can help you build good credit, while overspending and missing payments will harm your credit.

Debit cards are convenient, but if you spend more money than is in your account, you can be hit with high fees. Check your balance regularly and compare overdraft options to find the best account for you.

Check your credit report

It is important to keep an eye on your credit reports to spot errors or misreported debts. Catching mistakes early can help you protect your credit score.

You are entitled to one free credit report each year from each of the three nationwide credit bureaus, available at annualcreditreport.com or by calling 1-877-322-8228.

Protect yourself against Identity Theft

Sharing too much personal information can leave you vulnerable to hackers, scammers and other criminals who may steal your identity. Identity theft could seriously hurt your finances and ability to repay your loans.

In order to prevent identity theft, do not share the following or other details with anyone you don’t know:

  • Social Security Number
  • Account numbers

Keep financial information in a safe place, even in your dorm or apartment, and shred any financial records you do not need.

Limit activity on public Wi-Fi to surfing only, not checking your bank account or making purchases. Keep anti-virus software up-to-date and consider using two-step authentication for online accounts.

After You Graduate

For many North Carolinians, graduation means that it is time to start repaying your student loans. These tips will help you keep your debt under control and repay your loans on time.

Congratulations! You graduated college and earned your degree. It took a lot of hard work, but you did it. For many North Carolinians, graduation also means that it is time to start repaying your student loans. 

Important information is also here about consolidation, loan forgiveness and options if you are having trouble repaying your loans.

Know what you owe

Always keep tabs on your student loan balance, the kinds of loans you have, and who your lenders are.

Know your grace period

For most loans, there is a grace period between your graduation date and when your first loan payment is due.

Don’t miss your first payment, and remember that interest still accrues during the grace period.

You may qualify for loan forgiveness if you take a public service job. Your loan payments may be deferred if you are going directly to graduate school.

Keep in touch with your lender

If you move or change your contact information, don’t forget to let your lender know. Missing an update about your loans could set you back. Do not ignore mail or phone calls from your lender.

Defaulting on your loans can cause serious financial problems for you in the future. Also, know about the rules that collection agencies are supposed to follow.

Know your repayment options

Most federal student loans come with a standard, 10-year monthly repayment plan. This may not be suitable for everyone, especially if the monthly payment on the loan is too high. Extending your repayment period beyond 10 years will make your monthly payment more affordable, but will also cost you significantly more in interest over the life of the loan.

Read more about extended repayment or income-based repayment plans to find out if they are right for you.

Know your options if you cannot pay

If you struggle to find a job out of college, fall ill, or if the monthly payments are more than you can reasonably afford, options are available to help you manage your loans.

Deferments or forbearances allow you to temporarily postpone loan payments. However, interest will still accrue while you are in or forbearance, so make sure to monitor your loans and pay what you can.

Get Ahead

It is never too early to start paying your student loans. The more you can pay now, the more you will save in the future.

You can save on interest and even shorten the life of your loans by paying off the most expensive loans first (i.e. the loans with the highest interest rates) and paying down your debt early. Even a small amount extra each month can make a difference.

Include specific instructions with these extra payments, directing that they be applied to the principal of your highest interest loans. Then monitor your account to make sure extra payments are applied correctly.

Never pay money upfront for help managing your student loan debt

In North Carolina, it’s illegal for someone to charge you upfront fees for help dealing with your debt. Stay in touch with your lender for the best options on managing your student debt.

Monitor your credit

Student loans can greatly impact your credit, which can make it harder for you to get a car or buy a house.

Even if you are making your monthly payments, it is important to keep an eye on your credit reports to spot errors or misreported debts. Catching mistakes early can help you protect your credit score.

You’re entitled to one free credit report each year from each of the three nationwide credit bureaus, available at annualcreditreport.com or by calling 1-877-322-8228.

Learn about consolidation

Consolidation combines multiple loans into one monthly payment with a fixed interest rate. While this often sounds appealing to borrowers, there are upsides and downsides with consolidating.

While consolidation may lower your monthly payment, it may also extend the repayment period of your loan further into the future, costing you more in interest in the long run.

Consolidating federal loans into a private loan is very risky and often doesn’t make financial sense. It is important to remember that you will also the lose rights that come with the federal loan if you consolidate it into a private loan.

Learn about loan forgiveness

Several programs will forgive your federal loans based on the kind of work you do, or your employer.

The Public Service Loan Forgiveness program forgives all student debt remaining after 10 years of work in a public service field.

Loan forgiveness may also be an option for volunteer work, teachers, nurses or military personnel.

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