Congratulations! Earning your degree is quite an accomplishment, and we wish you the very best in your life after St. Thomas!
Before you go, however, there are a few things we want to share with you.
(Based on an article from the Institute for College Access & Success)
- Know your loans: It is important to keep track of the loans that you borrowed. Know the lender/servicer, balance and repayment status of each of your student loans. A good resource for your federal loans is the National Student Loan Data System (NSLDS). If you are unable to locate the lender for any private education loan, find a recent billing statement and/or original paperwork that you signed. Contact the school you borrowed the loan for if you can’t locate any records. (The Financial Aid Office at St Thomas can be reached through email or at 651-962-6550 for assistance.)
- Know your grace period: A grace period is how long you have after graduation before a payment is due on your student loan. For a subsidized or unsubsidized Direct Loan, you may have a 6 month grace period and for a Perkins Loan, it is a 9 month grace period. For federal PLUS Loans, a parent may have access to a 6 month deferment. For a private education loan, check your loan paperwork or contact the lender/servicer. Don’t miss your first payment.
- Stay in touch with your lender/servicer: If you move, change your telephone number, email address or your name, you need to let your lender/servicer know. If you are comfortable with online access, set up an online account. It is quick way to reference your account status and contact the lender/servicer easily. Open and read every piece of mail, paper or electronic, that you receive about your student loans. If you are receiving unwanted phone calls, don’t stick your head in the sand, talk to them and get to the bottom of it. Ignoring bills or serious problems can lead to default, which has severe long term consequences.
- Pick the right repayment option: There are many options when selecting a repayment plan for your federal loans. Do your research, figure out a budget and pick a plan that is right for you. If you have questions, contact your lender/servicer. If you do nothing, your federal loan payments will be set up on a 10 year standard repayment plan automatically, but you can change this, if needed. Extending your repayment plan will cost you more over the long term, but can lower the monthly payment to make it more manageable. Some important options for federal loan borrowers are the income driven repayment plans that cap the monthly payment based on your income. Private education loans may not be as flexible, but contact the lender/servicer to discuss alternative repayment options.
- Don’t panic: If you are having trouble repaying your loan(s), remember that you have options. There are other repayment plans available that may lower your monthly payment or even postpone payments temporarily, such as a deferment or forbearance, depending upon your situation. Contact your lender/servicer with your questions or concerns.
- Stay out of trouble: Ignoring your student loan payments can have serious consequences. Delinquency and default can ruin your credit, which can make buying a car or a home in the future difficult. For federal loans, default kicks in after nine months of non-payment. When you default, your total loan balance becomes due, your credit score is ruined, the total amount you owe increases dramatically, and the government can garnish your wages and seize your tax refunds if you default on a federal loan. For private loans, default can happen much more quickly and can put anyone who co-signed for your loan at risk as well. Talk to your lender/servicer right away if you're in danger of default.
- Prepay, if you can: If you can afford to pay more on your student loan, do it. It will decrease the amount of interest you pay over the life of the loan. Talk to your lender/servicer on how to make this happen.
- Payoff the most expensive loan first: If you are thinking about paying off your student loan debt early, find the loans that have a higher interest rate and take care of those first. If you have private loans, you may want to consider paying those off first as they typically have a higher interest rate or less flexibility for repayment.
- To consolidate or not to consolidate: Consolidation combines multiple loans into one new loan. Do not consolidate your federal loans with your private education loans as you will lose all the benefits and repayment options. There are pros and cons to consolidation. Research all options to determine if this is the right step for you. Talk to your loan servicer or the Financial Aid Office if you have questions.
- Loan Forgiveness: There are programs that will forgive all or some of your federal student loan debt depending on your career path. For more information on Public Service Loan Forgiveness or other loan forgiveness programs, visit the Federal Student Aid Office.
Federal Perkins Loan: Recipients of the Federal Perkins Loan program are required to complete exit counseling with the Perkins Loan Office on campus. For more information, contact Bill Peterson via email or call 651-962-6610.
Federal Direct Subsidized or Unsubsidized Loan: Recipients of the Federal Direct Subsidized or Unsubsidized Loan must complete online exit counseling at www.studentloans.gov.
Student Educational Loan Fund (SELF): Recipients of the SELF Loan typically pay interest quarterly while in school, but repayment changes upon graduation. Complete SELF online counseling to ensure you understand the changes and all your obligations.
Utilizing your resources is a key component in successful loan repayment.
- Know what you owe.
- Get help navigating your federal loan repayment options.
- Use the Repayment Estimator to get an idea on your federal loan payment amount.
- Activate your Salt account to get exclusive access to an online library of resources to help track your debt, budget your income and develop smart financial habits that will last a lifetime.