Student Loan Tips

 Student Loan Tips for Recent Graduates

The Project on Student Debt has produced a list of the Top 10 Student Loan Tips for Recent Graduates. The list provides tips to help borrowers minimize the cost of their loans and outlines repayment options to help borrowers avoid default.


Mind the details

Keep track of every detail about both your federal and private student loans including your total loan amount, when your grace period ends, and what your monthly payments will be. By knowing these details, not only will you be more prepared when your loan bill comes due, if you find yourself unable to make your monthly payments, you can contact the appropriate lender and discuss your options.


Keep in touch

Do not ignore your lenders. Be sure to read the mail they send to you, answer their calls, and respond when necessary. In addition, if you move or change your contact information, let your lender know immediately so they are able to get in touch with you.


Don’t stop loan payments

Do not stop paying your loan without first consulting with your lender. Nonpayment will put a borrower into delinquency, and subsequently default, and can permanently ruin your credit score and increase the amount you will need to pay back. If you find yourself unable to make your monthly payments due to unemployment, health problems, or other personal matters, contact your lender to find out your options. The federal loan program allows a borrower to extend a repayment plan beyond 10 years or, if certain conditions are met, enter an Income-Based Repayment program (IBR). Private lenders may also offer repayment plans that reflect a borrower’s ability to repay. However, borrowers should note that any change in repayment can increase the amount you will ultimately pay back to the lender. Loan extensions increase the interest due, which is added to the loan principal. It is important to consider the ramifications of extending your loan period.


Pay more, if you can

Work toward lowering the principal owed on your loan. If you are comfortable making your monthly loan payments, it is worth it to consider paying a little more each month (if you can) toward the principal owed on your loan. Contact your lender in writing and ask that the extra payment go toward the principal, and not the interest or late fees, if any. Paying down your principal will reduce the amount you pay over the term of your loan. In addition, if you have extra income and are planning to pay back a loan early, choose the private loan with the highest interest rate first.


Consider consolidation

If you have multiple loans, you can consider consolidating them. If you have more than one private loan, you can consolidate into one loan in order to have a single monthly payment and fixed interest rate. Your federal loans can also be consolidated through the Direct Loan program. It is not advised, however, that you consolidate your federal and private loans together, as you will lose the repayment benefits available to federal student loan borrowers.


Learn about employer repayment programs

Finally, depending on your career, there are loan forgiveness programs available. A new program offered by the federal government is the Public Service Loan Forgiveness (PSLF). This program forgives any remaining student loan debt after 10 years of qualified payments to those who work in the government, nonprofit, and other public service sectors. For more information on this program, visit the Department of Education’s PSLF website. Teachers, PeaceCorps volunteers, and other public and private sector employees may also have loan repayment or forgiveness programs available to them.

Last updated: 6/7/2013

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