Paying Student Loans
If you have taken student loans, your school is required by law to give you
an exit interview. This is simply a time to meet with a financial aid advisor to
discuss your repayment obligations and options. Make sure not to miss the
Because most college students don't get jobs immediately after graduation,
lenders usually offer a grace period of about six months before you need to
start repaying your student loans. Take time during your grace period to
organize your finances and evaluate your options.
There are many different ways you can arrange your payment schedule,
depending on what you can afford:
- The standard payment plan, if you can afford it, will offer you the
lowest total loan cost.
- A graduated payment plan will start you out with lower payments that
increase as time goes on.
- With income-related payment plans, your monthly payment amounts are
tied directly to your income instead of rising gradually no matter what
- Extended repayment allows you to make smaller payments for a much
longer period of time.
As an unemployed recent college graduate, you may have much more time than
you have money. You can get help paying off your loan by volunteering for
certain government projects. Some will forgive your debt entirely.
- Peace Corps not only allows you to visit exotic locations (Third
World countries) and challenge yourself (endure difficult conditions)
but you can cancel a substantial portion of your Perkins loans in return
for service. You can receive a 15% cancellation on each of your first
two years and 20% on your third and fourth years. That's a 70% reduction
for four years of service. You do have to contact your lender in advance
of your term of service to receive your cancellation credit.
- Americorps If you like the idea of the Peace Corps but don't want to
leave the country, Americorps is for you. You can receive up to $7,400
for living expenses and, after a year of satisfactory service, $4,725 to
be used toward education. The education award can be used for future
education or to pay off previous education debt (your student loans).
The work itself can be reward enough: cleaning up the environment,
helping at-risk children and other positive community-building services.
- Military Service The Army, Air Force, Navy, Marines and the National
Guard all offer education assistance programs. Check with your local
recruiter to find out how these programs can help you.
- Teaching Depending on where and how long you teach, you can receive
complete loan cancellation or at least a deferment of some loans by
filling some understaffed teaching positions, including teaching in
schools serving low-income students or teaching certain subjects in
which there is a shortage of teachers.
- Legal and Medical Service If you choose to study medicine or law you
can rack up some hefty education loans. But there are programs that
offer partial cancellation of loans for public service.
If a lender can offer you a lower interest rate and consolidate all of your
loan payments into one convenient payment, you could save a lot of money over
the life of your loan.
With everything that happens after college, it's easy to see why recent
graduates forget to make timely payments on their loans. But if you don't pay
your loans for six months, you will face collectors, your credit rating will
suffer and your likelihood of being approved for car loans, mortgages and credit
cards in the future will be greatly reduced. Staying on top of your loans from
the get-go is one of the smartest financial decisions you can make.