As your college career comes to a close, you are probably celebrating your accomplishments, saying good-bye to friends, and searching for your first real job. But what about all of that money you borrowed to get through school? Student loan debt is real debt and must be taken seriously. So, before you leave school there are some important things to consider and understand.
Project on Student Debt and NASFAA have compiled a list of the Top 10 Student Loan Tips for Recent Graduates. Whether you just graduated, are taking a break from school, or have already started repaying your student loans, these tips will help you keep your student loan debt under control. That means avoiding fees and extra interest costs, keeping your payments affordable, and protecting your credit rating.
You may view your PSU Loan History online to determine the total amount borrowed in Federal, Private and PLUS loans while at PSU. This online tool is an excellent way to become knowledgeable on how your borrowing will impact the repayment of all your loans while enrolled at PSU (including alternative and parent PLUS Loans). This information pulls student’s loan history (accessed from the PSU portal) and displays it to help each student understand the impact of loan debt upon graduation and repayment. Students can track this information beginning their first year at PSU through the time they graduate.
You may also wish to view our Repayment Checklist to assist you with preparing to begin repayment on your loans. A guide to repaying your student loans also offers information on federal student loan repayment options, borrowers’ rights and responsibilities, and consequences of default.
What is the National Student Loan Data System (NSLDS)?
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.
What is Exit Counseling?
Before you leave school, the Financial Aid Office will provide you with directions on how to complete Exit Counseling online. The counseling session provides information about how to manage your student loans after college. It is REQUIRED for all students who borrow Federal loans.
- Why you need to stay in touch with your loan lender.
- Repayment options (discussed below).
- Calculator to determine how much your monthly payment will be.
- When repayment begins.
- What to do if you have trouble making payments on your loans.
- Combining your loans.
- Loan cancellation and forgiveness.
- Consequences of delinquency and default.
- Tips for successful repayment of your student loans.
- How to build good credit.
- How to start saving money.
- Where to request your credit report from.
- Complete a personal budget.
When does repayment start on my loans?
Repayment on your loans begins after you graduate, leave school, or drop below half-time enrollment. Generally you have a grace period before you have to begin repayment. The grace period is a determined length of time when no payments are due. You can start repaying during the grace period and save some money in the long run.
- Federal Perkins Loans – the grace period is nine months.
- Federal Direct Loans - the grace period is six months.
- Federal PLUS Loans – repayment begins 30 to 45 days after the final loan disbursement.
Are there other types of Repayment Plans available?
If you are having difficulties making timely payments, there are several repayment plans available. More information about each can be found at StudentAid.ed.gov. Contact your loan servicer directly if you would like to discuss repayment plan options or change your repayment plan.
- Standard: Your monthly payments will be at least $50 and you will have up to 10 years to repay.
- Graduated Repayment Plan: Your payments will start out lower and will increase over time. Your monthly payments must be at least equal to the interest accrued on the loan between scheduled payments. You will pay off your loans in 10 years.
- Extended Repayment Plan: The time for repayment could be extended from 10 years up to 25 years. Your monthly payments would be lower than with the 10-year standard plan but you will pay more over time with this plan.
- Income-Based Repayment Plan: Your monthly payments will be based on your yearly income and your total loan amount.
- Pay As You Earn Repayment Plan: To qualify, you must have a partial financial hardship. Your maximum monthly payments will be 10 percent of your discretionary income.
- Income-Contingent Repayment Plan: The time for repayment of this loan could be extended from 10 years up to 25 years and your payments change as your income changes.
- Income-Sensitive Repayment Plan: Your monthly payment is based on annual income and will change as your income changes. This repayment plan remains at 10 years.
Note: The longer your loan is in repayment, the more interest you will pay. For a chart to explain how repayments work, a great tool to use is the Direct Loan Repayment Calculator or the Loan Payment Chart Generator.
The Project On Student Debt: Ditch Your Debt gremlin
What is Consolidation?
During your grace period you may want to consolidate your federal education loans. Consolidation allows you to simplify the repayment process by combining your federal loans into one loan, so you make just one payment a month. This one monthly payment may be lower than what you would be required to pay monthly if you do not consolidate.
- You will have a longer period of time to repay your consolidation loans, but this means you will pay more interest over time.
- Consolidation can double total interest expense! Once made, consolidation loans cannot be unmade.
- The repayment period is 10 – 30 years, depending on the amount of your debt and the repayment option you choose.
Use our Loan Consolidation Checklist to determine whether consolidation is the best option for you and to assist you with what information you’ll need to consolidate your loans.
Want to save money?
Some loan holders offer reduced interest rates if you choose to repay your loan using electronic payment. Electronic payment allows your bank to automatically deduct your monthly payments from your checking or savings account. Also, you may be able to get a reduced interest rate if you make a certain number of consecutive on-time monthly payments.