Student Loan Tips for Recent Graduates

By Ian Acosta on April 30, 2017

For the majority of us, student loans will be a burden on our backs by the time we graduate. Besides the nagging pressure to find a job out of college, the government expects reparations for what helped you get your degree in the first place.

These tips will help you keep your loan debt in check and give some ideas and suggestions for how to handle paying now, later, or in a few months. The most important thing no matter what is to make sure not to fall behind on payments as it can hurt your credit rating in the long run.

Here are some tips to keep the payments low and strategies to pay them off in a way that works best for you.

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Keep track of your loans

When the fateful day of graduation comes, and passes, you will no doubt get an email shortly after from a bank or lender that you took your loans through. Keep track of which loan is through which lender and the balance, repayment status, and payment schedule for each loan.

A helpful site is www.nslds.ed.gov. On this site, you can log in and track your loan amounts, the lenders they are through, and the repayment schedule and plan for all federal loans. If you do not see certain loans listed, they may be private loans not provided by the government. In this case, it will be on you to be mindful of the status of those. If you are ever confused, you can contact your school to get a better picture of the situation.

Keep track of any grace periods

Grace periods are very important when it comes to repaying loans. Unsurprisingly, different loans have different grace periods to go along with them. Just so there is no confusion, a grace period is how long you can wait after leaving school to make your first payment on the loan.

For federal subsidized and unsubsidized loans (or Stafford loans as they are more formally referred to) the grace period is six months from the month you leave school. For federal PLUS loans, there are different deferment options for paying back loans based on certain criteria relating to the status of the student.

Check out studentaid.ed.gov for a more detailed breakdown of PLUS loan deferments. Be sure to know when the grace period stops, however! You definitely do not want to miss that first payment.

Research repayment options

When federal loans are due, you are put on a standard 10-year repayment plan. If this payment structure is too much to handle, explore different repayment plans for your loans. The one drawback to extending the 10-year plan is that you will eventually end up paying more in interest even though your monthly payment will be lower.

Different types of structured repayment plans are income-based repayment and Revised Pay As You Earn. These payments vary based on your income and have different structures to them based on which option would best fit your situation.

If you do have a private loan the repayment structure could be a bit different, and so too could the steps to apply for income-based payments. Check with your lender to see what options they provide.

Deferments and forbearance

If you are having trouble finding a job out of college or your income is not as high as you thought it would be, keep in mind that you could request a deferment or forbearance of your loans. One example is an unemployment deferment if finding a job is tough. Additionally, if your income is low, you can request a forbearance on paying your monthly payments for a certain period of time.

Keep in mind that interest will accrue even if you do not make payments which can add up in the long run. However, a temporary reprieve is better than avoiding your payments altogether.

Delinquency and default

Do your best to not fall into either of these situations! After nine months of non-payment, you will be considered to have defaulted on your loan. In that instance, the entire balance comes due and your credit takes a dramatic hit. Not only that, the interest will only grow and you could be subject to garnished wages. If you are in danger of default, talk to your lender right away to avoid this dangerous situation.

Loan payment order

Say you have multiple loans and you have run into some money. You want to pay one of the loans down drastically as to speed up the process of getting this gigantic burden off your back. Which one should you pay off first? The one with the highest interest rate.

Every loan is broken down into two parts: principal and interest. Typically, with a high-interest rate loan, most of the payment goes to paying down the interest, not the actual principal of the loan. The goal is to whittle the principal down as much as possible so that the interest has nothing to grow off of (the principal) and thus, pay off the entirety of the loan faster.

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