If you have a student
loan, you are not alone. One recent study found that almost two thirds
of graduating college seniors had student loans and the average loan amount
was over $23,000. For those graduating from private schools and those
getting advanced degrees, the numbers were even higher. The student loan
environment is constantly changing and the rules can be confusing. In
addition, the federal government is now playing a far more active role.
The result is that
if you have student loans, you are going to have to do some investigation
on your own to fully understand your particular situation. As you go through
that process, there are a few things to keep in mind:
- What type of repayment
plan will you have? Many loan programs allow you to defer starting the
repayment process until you graduate and then have level payments for
up to ten years to pay off the loan. Depending on the type of loan you
have and your situation, you may be able to extend the term or have
- What are the terms
(repayment and interest rate) of your loan? As you review your loan,
be sure to compare the student loan rate with any other borrowing you
may have. For example, it may sound nice to pay off your student loan
just to get it behind you, but if that means that your credit card balance
would grow, it may not make sense.
- Would consolidating
your loans or refinancing them make sense? Again, you need to review
all of the terms of any existing loan with the terms of a potential
consolidated loan. Be sure to consider rates, terms and any costs of
consolidating or refinancing. There is a calculator in the Personal
Life Financial Skills Resource Center that may be helpful.
- What if you are
having trouble making your required payments? Living up to your repayment
responsibilities is serious.
- Missing payments
may trigger penalties and ultimately that may be reflected on your credit
record. If this is an issue, contact your lender immediately. You may
be able to work out an agreement to extend the repayment period or change
the terms to ease the problem. Your lender does not want to see the
loan go into default and neither do you.