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Everything I Wish I Knew About My Student Loans

Through my undergraduate and master’s degrees, I earned both a quality education (theoretically) and tens of thousands of dollars worth of loans (realistically). I distinctly remember going to a student loan financial meeting when I was in graduate school, taking copious terrible notes, and not understanding what any of it meant.

Let’s start with the basics

1) Grants are free money. You don’t have to pay these back. Pell grants are common. TEACH grants are also common, but are a bit more complex.

2) With a loan, someone gives you money now (the principal). You will need to pay that money back over the course of some years, in addition to interest (a percent of the principal). The full monthly payment covers some principal and a lot of interest initially. Paying more than the full monthly payment goes towards reducing the principal, which may be a good thing if your loans have a high interest rate.

3) Some loans start accruing interest immediately (bad). These are called unsubsidized loans. Some will not accrue interest for a defined period of time (while you are in school for example), but will start accruing interest when you begin work. These are subsidized loans (better than unsubsidized). Typically the US government subsidizes these loans by paying your interest for you.

4) A few loans can be forgiven. This means that if you work in a high-need area for a certain number of years, you will not have to pay these loans back.

5) Grace periods are periods of time before you need to start paying for the loan. Typically, these grace periods last for a few months after you graduate.

6) Loan deferment is a type of grace period. A deferred loan will not accrue interest during the deferment period.

A few quick tips on paying off your student loans

1) You have to work at a Title 1 school to take advantage of loan forgiveness. If a non-Title 1 school offers you significantly more pay, enough to cover the difference in loan forgiveness, then you can consider working there. Here is a link to confirm if a school is Title 1. Some loan forgiveness programs allow you work anywhere as long as you fill a high-need course — typically math, science, special education, foreign language, and bilingual education. Why math and sciences? Well

2) Pay off high interest loans first. For any loans with interest above 6%, try to pay more than the full monthly payment. Every dollar above that you spend goes towards reducing the principal, which reduces the total amount of money you will spend on paying off the loan during its lifetime.

3) For lower interest rate loans (less than 5%), just pay the minimum full monthly payment. Invest any extra money you have towards your retirement. Financial advisers recommend you save 10-20% of your income towards retirement.

More information can be found about investing in reducing student loans or retirement can be found here

More information abut how to save for retirement can be found here. 


Below, I will go into more detail on individual student loans and grants.

Federal Perkins loan

Loan Servicer: Check with your undergraduate/graduate school

Subsidized?: Yes

Initial Grace Period: 9 months after graduation

Deferment Available: Yes, check with your undergraduate/graduate school

Forgiveness Available: Yes, check with your undergraduate/graduate school. You need to work for 5 years under the required circumstances for it to be fully forgiven. Required circumstances most likely mean either teaching in a Title 1 school or teaching a high-need subject like math or science.

Deferment/Forgiveness Method: Your employer and you need to fill out a form provided by your loan servicer (it should look something like this, but will be different for each university)

Interest Rate: 5%


Federal Direct Subsidized and Unsubsidized Stafford loan

Website Login: Create an account at FederalStudentAid

Subsidized?: Normally no. Only subsidized for some undergrads

Grace Period: 6 months, kind of, but interest will accrue during those 6 months

Deferment available: No

Forgiveness Available: Yes, kind of. There are two options. First is the Teacher Loan Forgiveness Program (TLFP). For high school math, science, and special education teachers, up to $17,500 in loans can be forgiven. For other teachers, up to $5,000 can be forgiven. You need to work for 5 years to be forgiven, and need to have full payments on your loan for those five years. The second option is the Public Service Loan Forgiveness (PSLR) program. If you have been making full payments for 120 months (10 years), you can have the remainder of your loan forgiven. You should sign up once you start working, rather than at the end of those ten years. Note, if you use the TLFP, and then want to use PSLR, you can’t include the 5 years of service in the TLFP as part of the 120 months required by the PSLR. The 120 month period would start after your 5 years for the TLFP is over. That got confusing. This paragraph warrants a future article.

Deferment/Forgiveness Method: Fill out this form after teaching for 5 years for the TLFP. Here is the form for PSLR.

Interest Rate: 4.5% for undergrads, 6% for grad students


Federal Direct PLUS loan

Website Login: US Department of Education at FederalStudentAid

Subsidized: After 2012, nope

Grace Period: 6 months, kind of, but interest will accrue during those 6 months

Deferment Available: Nope

Forgiveness Available: Nope

Interest Rate: 7%



Website Login: TEACH Grant Launch to Action. Create a login.

This grant is different than most because you must meet certain job requirements and submit a form to keep this grant from becoming a loan. I did not know about this form, which cost me thousands of dollars.

Grant Requirements:

1) You must teach in a high-need field for 4 of the first 8 years after graduating. In California in 2017, high-need fields include English and history as well as the other typical classes (science, math, special education, etc.)

2) You must teach in a school serving low-income students. To find out if your school qualifies, go here and click on “search.”

3) You must submit proof to the US government that you are meeting these requirements yearly. This is what I forgot to do. See page 10 here.


Individual University Loans

Different universities offer different loans and grants for students. Certainly take advantage of grants. If there are any loans that offer a forgiveness program, look into it. Below is the only example of this I know of.


Avery-Stanford Loan

I was fortunate to receive the Avery loan from Stanford. The forgiveness requirements are similar to the Perkins loan. For this specific loan, be sure to submit paperwork showing proof of employment at the end of every school year. By paperwork, I mean a letter with your employer’s letterhead (ask your school secretary) which describes your employment status — full-time, subjects taught, dates employed). Get this signed by your principal and submit the form to Stanford. See this as an example. Make copies of everything. The entire loan will be forgiven in 4 years.