Graduating Soon? Here’s What to Know About Student Debt

Editor’s Note: The following article is guest post from our friends at LendEDU.  Our goal is to give readers the tools and information they need to manage their student loan debt.  

If you’ll soon be walking across the stage to accept your degree, you may be wondering what comes next when it comes to your student debt. Chances are you have some student debt because research shows that a majority of students are not able to get through their college education without having to take out at least some.

The good news is that upon graduation you do have a little bit of time. During this time, it is important to be knowledgeable about your student loan debt and make a plan of action to take it down. No one wants to worry about it, but ignoring it is never a good plan.

Here are some things that you need to know about student debt after graduation.

It is Important to Know the Details of Your Loans

First and foremost, you need to know what you are working with. Gather up all of the information about all of your loans. If you have federal student loans, you can find the information for them in the NSLDS. If you have private loans, as well, you should check with your student loan servicer to see where you can find the information needed.

Once you find your loans’ information, note the balance, interest rate, repayment term, and loan type for each. You should know if your loans have a cosigner or not, and if they do, you should come to an understanding of how you’ll work with your cosigner towards repayment.

It may be a good idea to get a notebook or create a spreadsheet so that you can write everything down and keep it in one place. Contact your loan servicer to gather any missing details that you may be unable to find in your records.

Most Student Loans Have a Six-Month Deferment Period After Graduation

The good news is that there is a grace period of six months on most federal student loans and private student loans. This gives you time to get out of college and settled into a job (hopefully) so that you will have the financial means to be able to pay those student loans on time.

If for some reason you are unable to meet your minimum payment requirements when the loans become payable, call your servicer to see what options you have. You may be able to switch to an income-driven repayment plan if you have federal loans or change your repayment plan to something that works for you if you have private loans.

There are Multiple Repayment Options for You to Choose From

Speaking of repayment plans, you have quite a few that you can choose from. There are not only multiple income-driven repayment plans, but there are also extended repayment plans and graduated repayment plans. Many students even choose to refinance their student loans so that they can get a lower interest rate and pay their loans off faster. Others may simply consolidate using a federal consolidation loan to combine their payments into one, making it easier for them to pay each month.

The choice is yours, but make sure that you choose an option you can afford so that you can avoid going into default.

Federal Loans Have Deferment and Forbearance Protection During Times of Hardship

If you ever find yourself in a situation where you’re unable to make your student loan payments, don’t simply ignore them and hope that they will go away.

News flash – they won’t! They are here to stay until you pay them off.

The best thing for you to do when you are not able to afford your minimum payment is to call your loan servicer. They can discuss the options that may be available for you during times of financial hardship. While entering into an income-driven repayment plan is a better option, you may be able to get a period of forbearance or deferment in which no payments are required.

Just remember that whenever you aren’t making your payments or when you extend your repayment term (as is the case with income-driven repayment plans and extended repayment plans) your loans will accumulate more interest which will cost you more in the long run.

You May Be Paying Off Student Loans for a Long Time

Finally, it is important to understand that you may be paying on your loans for quite some time. In fact, some people have repayment plans that span over 30 years which certainly gets in the way of certain plans like retirement. This is the average term for a mortgage these days, meaning you could be paying on your loans as long as you would a house.

If you can repay your loans during the standard 10-year term (for federal loans), refinance for a shorter-term length (and hopefully a lower interest rate), or make extra/larger payments on your loans, you can pay them off faster and save money in interest costs.

Bottom Line

It is easy to be overwhelmed when it comes to your student debt, especially right after you graduate. The problem is that so many students just push it to the side and wait until the last minute. Instead of doing that, get your game plan together early on.

The sooner you focus on tackling that student debt, the sooner you will be able to get it paid off and move on with your life financially.


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