Whether you're a parent watching your child starting his first college classes, a senior eager to make your way in the world, or a graduate student putting finishing touches on your MBA, it's worth taking a few minutes to understand the right (and wrong) ways to pay back your loans.

If you're a student, be sure to download MEFA's Debt Management Guide (PDF). It has some great advice on how to manage money, credit, and debt. You can also download great budget worksheets (PDF) to help keep track of your expenses in one place.

• Read your loan promissory note and Truth-In-Lending disclosure statement. They may not read like bestsellers, but you'll be ahead of the game if you know the terms of your loan. If you need help understanding some of the information on these documents, please contact us for assistance.
  
• Keep your loan documents together in a safe place so that you'll be able to find them when you need them. This includes promissory notes, cancelled checks, notices of disbursement, letters, and other communications about your loan(s).
  
• Students: Set aside a little money each week to make sure that you will have enough to be able to begin your payments when your grace period is over. Saving as little as $10 every week while you're in college will turn into $2,000 when you graduate! And if you find a great job immediately, you'll have a ready-made emergency fund.
  
• Consider consolidating your federal loans. These are variable rate loans, and are subject to change over time. You may be able to keep future payments low by locking in a low fixed rate now.
  
• Paying back your loans on time is important! You can use student loan debt to your advantage by creating a good credit history. When you're ready to borrow in the future, other banks and lenders will see that you are a good risk for a loan. And sometimes, on-time payments can earn you discounts on your interest rate. See PLUS Loan Benefits and Stafford Loan Benefits.
  
• Whenever possible, use online banking or ACH automatic debits to ensure that payments are made on time.
  
• Make sure that you keep your lender informed about changes - your address, your legal name, school enrollment, transfers to a different school, graduation.
  
• Do everything you can to avoid default on your education loans. It can be frightening and upsetting to have financial difficulties that make it difficult to meet your loan payments. For the short-term, it might feel easier to avoid the problem, but it is much better to talk with your lender as soon as possible about your options. Default can lead to any of the following:
  • - Your loans can be turned over to collection agencies and you can be sued for the entire loan amount.
  • - You'll still owe the full amount borrowed, and you can even be charged with collection and court costs.
  • - Your wages can be garnished. This means that a portion of your paycheck will be automatically diverted toward loan repayment.
  • - You will cause damage to your credit rating and have difficulty borrowing money in the future for things like mortgages, car loans, and graduate education loans.
  • - You may be unable to renew professional licenses.
  • - You'll be ineligible for federal financial aid (for yourself or your kids someday), deferments, and federal interest benefits.