The Five Things You Should Know About Student Loan Repayment

By Kristina Delbridge, director of financial aid, Financial Aid Office

June 13, 2013

Student LoansGraduation is a time for celebration but for many students it is also the time when the reality of student loan repayment sinks in. There is some basic information that every student who is entering repayment should know:

‌‌1. Know who your student loan servicer is: Information regarding the amount of the federal student loan you borrowed, when it was borrowed, and who the servicer is can be found online at www.nslds.ed.gov. You may have multiple servicers, particularly if you were fortunate enough to get a Perkins loan and also had federal subsidized and/or unsubsidized student loans either through the Family Federal Education Loan (FFEL) program or the direct loan program. This step will allow you not only to review your information but also to make sure that the amounts you are being held responsible for are accurate.

2. Know the expectations: Loan repayment for the direct subsidized and unsubsidized student loans begin six months after the official end date of your last semester in which you attended at least halftime. So if you haven’t graduated but are taking a hiatus for more than six months, you will go into repayment. Likewise, if you have graduated but had an incomplete and were granted extra time to complete coursework, the date you finished the work isn’t the one used for repayment. The official end date of the course is used instead. For Perkins loans, repayment begins nine months after you cease to attend at least halftime.

3. Know your options: The servicer will automatically enroll you in the standard repayment plan for the federal subsidized and unsubsidized loan. Payments are at least $50 per month and the repayment is up to 10 years. However, there currently are seven different repayment plans available. So it is worthwhile to consider whether the standard repayment plan is right for you. This link, http://studentaid.ed.gov/repay-loans/understand/plans, will provide information about the different repayment plans and eligibility requirements. Likewise, there are other things to consider. If you have more than one servicer, you may want to consider consolidating your loans. Certain students may also qualify for student loan forgiveness, cancellation or discharge. This site: http://www.studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts will give you information regarding what requirements must be met.

4. Be smart about repayment: Consider whether you can start repayment earlier or if you can pay more each month. This will help to lower your overall repayment. Also, enrolling for automatic debit from your checking or savings account will result in an interest rate reduction. Contact your servicer to sign up. Each servicer has other programs in which you can get rewards for paying on time. Check out their website or contact them for information.

5. Stay on track: Continue to monitor your National Student Loan Data System information or your information directly on your loan servicer’s site. Likewise, if you begin to experience financial difficulty making your student loan payments, immediately contact your servicer. Your servicer will be able to talk with you about your situation and help you decide whether you should change repayment plans or if a forbearance/deferment is needed. Servicers want you to be successful in repayment and the conversation is much easier to have as soon as the difficulty begins rather than after months of non-payment. For those with multiple servicers, please know that you will need to contact each servicer. And finally, remember that the Financial Aid office is still a resource. We can assist you in connecting with your servicer and facilitating conversation with them in a conference call if needed.

By using these steps you can keep graduation a time for celebration while developing your own strategy for student loan repayment.

Image courtesy of creativedoxfoto / www.freedigitalphotos.net

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Article Contributors

Kristina Delbridge

Jessica Estremera

David Henahan

Michael Mancini

Cynthia Rybaltowski

Judith Belt-Smith