Evaluate Student Loan Options for 3 Stages of Borrowers

You may not know that April is Financial Literacy Month. That means it's a great time to get your student loans in order.

Fortunately, the bulk of outstanding student debt in the nation today is federal and comes with a wide range of options that will allow your student loan strategies to grow and adapt along with your life circumstances.

The following tips can help borrowers develop a student loan strategy at three different stages of the loan process.

1. When applying for loans: The common advice given out to students contemplating student loans is to not borrow more than their first year's salary. That's great advice if you know for certain what your career will be.

But if you're one of the many students who are starting college without a clear major in mind, you'll want to keep to some ground rules to make sure you don't get in over your head.

[Learn how to judge how much to borrow for college.]

First, stick to federal student loans. Student loans come in two flavors: federal loans that come from the government and private loans that come from banks or lenders.

Federal loans come with all kinds of flexible repayment options; private loans generally don't. Private loans should only be used if you've exhausted all of your federal loan options.

The average undergraduate student today leaves college with approximately $30,000 in student loans, and undergraduates can take out no more than $57,500 in federal loans for the entire four years or more they're in college.

If you're on course to borrow substantially more than your peers or exceed the federal student loan aggregate limit, that could be a red flag and a sign that you need to re-evaluate your college plan. Could you attend a cheaper institution or cut costs by living at home?

Next, don't borrow too much. There are disturbing reports that some student loan borrowers are borrowing more than they need for their studies. While student loans can be used for living expenses, it's important to limit your lifestyle now so you don't pay the price down the road.

Start a budget and track your expenses. If you get a refund from your student loan after tuition is paid and you don't desperately need the money to live on, consider returning it to your school or loan holder immediately to cancel that portion of the loan. Or think about paying the interest on your loan each month while you're still in school.

[Find out how to get rid of student loans without paying them.]

2. When repayment starts: Your student loan strategy as you start repayment will depend on where you are in other aspects of your life, as well as your personal outlook on handling debt. If you're the type of person who can't stand the thought of debt, you'll want to choose the standard 10-year repayment plan, which will retire the debt the fastest with the least amount of interest. You can also prepay your student loan at any time with no penalty.

Of course, if you're fresh out of college you may not be able to afford the monthly payment under a standard 10-year repayment term. Or you may have other financial priorities, like starting a savings account, marriage or saving for a home. Or, you may already have other family obligations that demand the bulk of your income -- after all, more than one-third of all higher education students are older than 25.

If this is you, than check out repayment options that make payment a manageable percentage of your income, lower your monthly payment by extending the payment term or start with lower payments for the first five years and then gradually increase payments as your salary rises -- for federal loans.

Many of these payment plans will increase the amount of interest you pay over the long haul, but for some borrowers that is an acceptable trade-off. And if the alternative is falling past due, then you'll definitely want to get on a different repayment plan before your credit is dinged.

[Explore what consolidating your student loans will mean.]

3. Once you're established. Don't leave your student loan payment on autopilot through the years. If you chose an alternative payment plan right out of the gate from college, but now can afford to throw more money toward your student loan, you can change your repayment plan at any time -- though you typically can't change it more than once a year.

Even if you've been paying your student loan successfully for many years, you could be thrown a curve ball. Life happens: divorce, unemployment, illness and more. Know that you can temporarily postpone your federal education loan payments without damage to your credit score, although interest may accrue.

Evaluating your student loan strategy at every stage will help keep you on track to successfully retire the debt.

Allesandra Lanza is the director of corporate public relations for American Student Assistance. She has nearly 20 years of experience in the student loan industry, and has answered students' questions about their federal loans; conducted on-campus loan counseling sessions for students as they enter and exit school; and written about loan repayment, debt management, budgeting and more. Lanza received a B.S. in journalism from Boston University.