One of the most valuable things you can do to begin securing your financial future is to use the Bruin Budget Plan©. UCLA students are introduced to the Plan during their Debt Management Session©. Following the steps of the Plan results in a reduced and more manageable student loan debt. The Plan contains action steps that can be taken while in school, as well as steps that can be taken after you have left. One of the steps of the Plan that can be taken while still a student is Bruin Pay-As-You-Go™.

Introduced first at UCLA, Bruin Pay-As-You-Go™ is a simple, yet revolutionary concept in student loan maintenance. Traditionally, students have deferred the repayment of their student loans until they have finished school. Pay-As-You-Go™ means that you begin to make payments to your student loans while still a student. In order that the sacrifice you will make will produce the greatest rewards, you need to approach this step prudently. The steps listed below guide you through Pay-As-You-Go™:

How to Pay-As-You-Go™
To put Pay-As-You-Go™ into practice, you will need to:

• STEP 1: Create a formal and realistic budget that includes all of your personal and school expenses. Keeping a spending diary of your day-to-day expenditures can show you exactly where your money is actually going. You may be shocked at the amount of waste in your present spending habits.
• STEP 2: Identify areas in your budget where you can trim excess spending. These are the areas from which you will eventually be able to re-direct the savings you make toward your student loan debt.
• STEP 3: Identify your lenders, and notify them of your intentions for early repayment of your loans. Obtain and record any pertinent information your lender provides, including account numbers and payment addresses. Be sure to find out how much you owe, and what kind of loan you have, and whether the loan is subsidized or unsubsidized. As you will read below, knowing whether or not a loan is subsidized is extremely important.
• STEP 4: Create a file in which you will record all of your payments and your declining balance. If you pay your lender by check, keep your cancelled checks in this file as a record of your payments. If you only receive statements for your checking account, photocopy your monthly statement and highlight the appropriate check transaction. If you pay by money order, save your purchaser’s copy for a record of your payment.

Additional Information
Personal and entertainment-related expenses, like eating out or going to movies, make up the discretionary part of a person’s budget. The source of Pay-As-You-Go™ payments will come from your discretionary income. Working a small number of hours per week can create valuable extra income that can supplement your Pay-As-You-Go™ payments.

Don’t make early payments to a Perkins Loan if you think you might be eligible for an employment cancellation benefit later. Under the terms of this loan, if you are a teacher in a Title I school, a social worker at a certified agency, a nurse or medical technician, or work in other designated fields, you can request cancellation of your loan over time. However, if you make or have made payments to a Perkins Loan for which you are entitled to a cancellation, you will not be able to get a refund.

For subsidized loans, the government or the lender pay any accrued interest as long as you remain enrolled in school as at least a half-time student. The payments you make while in school will go directly to the loan’s principal (the amount borrowed), and reduce the amount you owe. For unsubsidized loans, you must pay the accrued interest while you are in school, or it is capitalized. When interest is capitalized, it is actually added to your original loan, thereby increasing the size of your loan. If you have borrowed an unsubsidized student loan, your lender will ask you to choose whether to pay your interest periodically while in school, or have it all capitalized. Choose the option that will have the lender bill you for interest. Paying the interest, or as much of it as you can, dramatically reduces the amount you owe. In almost all cases, it is advisable to make payments to interest due on unsubsidized loans before making payments to reduce a subsidized loan.

If you are heading toward an advanced degree, it is especially important that you begin now to take control of your debts. Otherwise, your debts can take control of you and can begin to start dictating your future. Living frugally now can ensure you will live with plenty later. To give you just a couple of examples, a simple cutback of one movie ticket per week, or one pizza or one hamburger lunch per week, translates into approximately $20.00 to $40.00 per month. Applying $20.00 to $40.00 per month to your student loan will translate into a reduction of between $1000.00 to $2000.00 in the amount you would otherwise owe your lender at the end of four years on a subsidized student loan.

Using Pay-As-You-Go™, you will pay less interest and you might have a smaller monthly payment. You could very well be finished with repayment sooner, and start enjoying the things in life for which you have worked so hard!