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 your required Exit Loan 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.
Some of the valuable information you will receive upon completion of your Exit Counseling Interview:
- 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?
After you graduate, leave school, or drop below half-time enrollment, generally you have a grace period before you have to begin repayment. A 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.
- For Federal Perkins Loans, the grace period is nine months.
- For Federal Stafford Loans, the grace period is six months.
- For Federal PLUS Loans, repayment begins 30 to 45 days after the final loan disbursement.
Note: You are responsible for beginning repayment on-time, even if you do not receive this information.
If you are having difficulties making timely payments, there are four repayment plans available. Check with your lender for more information.
- Standard: Your monthly payments will be at least $50 and you will have up to 10 years to repay.
- Graduated Repayment Plan: This means that 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.
- Income-Based Repayment Plan: Your monthly payments will be based on your yearly income and your total loan amount.
- Extended Repayment Plan: To be eligible for this plan, you must have borrowed your first loan on or after October 7, 1998 and have FFELs totaling more than $30,000. Your payments will be fixed or graduated over a period of up to 25 years.
- Pay As You Earn Repayment Plan: To qualify, you must have a partial financial hardship, which means the monthly amount you would be required to pay on your eligible federal student loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under Pay As You Earn. You also must be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. This plan should be available towards the end of 2012.
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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.
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.
Important Facts to Remember When Consolidating Your Loans:
If you have a Stafford Loan made on or after July 1, 1995, you can reduce your consolidation rate by up to half a percentage point or more if you can consolidate before the end of your grace period.
- 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.
- By consolidating federal loans, students can lock into a lower interest rate.
- You can get an even lower interest rate if you consolidate during your grace period.
- The repayment period is 10 – 30 years, depending on the amount of your debt and the repayment option you choose.
What to Consider Before You Consolidate
- Can I afford payments without consolidating?
- Would consolidation make my payments more affordable?
- Am I willing to pay additional interest?
- Will my interest rate be higher or lower?
- Will I receive any benefits from my lender?
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. For more information on federal loan consolidation, please visit the Direct Consolidation Loans Information Center
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.