STUDENT LOAN REPAYMENT SHOULD BE EASY

 Every year, almost two million people in the United States graduate from college. What comes next can be intimidating: finding a job, deciding where to live, managing those pesky student loans, and realizing how bad credit card debt can get. This is a guide for a college graduate’s first years of freedom. We’ll introduce you to the basic realities of career and personal finance and provide you with some resources to create the life you’ve always imagined.  

Steps to Success Checklist

You Owe What?!?!

You’ve just financed the past four years of your life and as a result, racked up a hefty sum of student loan debt that you’ll be repaying for the foreseeable future. Knowing your borrowing history will help you build your student loan repayment strategy.

The process for finding your loan will be different depending on whether you have federal or private student loans. Locating your federal loans is a straightforward process, but finding your private loans can be a little tricky.  If you have both, keep in mind you will need to take the correct approach for each type.

As you do your research, make note of the following information for each loan that you received on this spreadsheet template.

What Are Your Options?

Once you have identified your loans, the next step to success is to learn about the different repayment options available to you. While it may seem like you have a lot of options, it’s pretty likely that there are only a few viable choices for you to make. The options available to you will vary depending on the type of loans you have borrowed, your career path, and your current financial situation.

Repayment Plans

The repayment plans that are available to you vary depending on the type of loans you have borrowed.  For example, only federal loans are eligible for federal repayment options, while private loan repayment plans vary by lender.

Forgiveness, Cancellation, & Discharge

The terms forgiveness, cancellation, and discharge mean nearly the same thing, but they’re used in different ways. If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation. If you’re no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.

Depending on what type of federal loans you have, you may be eligible for different forgiveness programs. These forgiveness programs may forgive all or part of your loan balance if you meet certain (very strict) criteria.  It’s extremely difficult to have your loans forgiven, so it’s important that  you know and understand all eligibility requirements.  We suggest taking a look at  the current Forgiveness Data before setting your expectations.

Loan Forgiveness, Cancellation, and Discharge Programs

For a complete list of programs, visit Federal Student Aid’s website.

Consolidation & Refinancing

The terms “consolidation” and “refinancing” are used interchangeably, but they have very different meanings when it comes to student loan repayment strategy. It’s important to know the difference between the two.

When you consolidate student loans, you’re combining multiple federal loans into one. The interest rate on the consolidation loan is usually the weighted average of the interest rates on all the loans combined. 

When you refinance student loans, you’re getting a new loan to pay off your existing student loans. The interest rate will depend on your financial situation (credit score, income, debt-to-income, etc.). As a result, refinancing may save you more money over the life of your student loans.

What’s Your Plan?

Knowing your borrowing history and what options are available are the first steps to developing your repayment strategy.  Before choosing a repayment plan, it’s important to consider your financial goals.  

Here’s some information to help you develop your repayment strategies for federal and private student loans.

Consider evaluating your repayment strategy at least once a year.

Who’s Got Your Back?

If you’ve completed the steps to resolve your dispute and you believe the answer you received is wrong or incomplete, you may need to contact the Federal Student Aid (FSA) Ombudsman Group of the U.S. Department of Education (ED). The Ombudsman Group is a neutral, informal, and confidential resource to help resolve disputes about your federal student aid.

You should make every effort to resolve your disputes before contacting the Ombudsman Group:

U.S. Department of Education

FSA Ombudsman Group

P.O. Box 1843

Monticello, KY 42633

(877) 557-2575

Remember, the Ombudsman Group can only help resolve disputes about federal student aid. If you have a dispute about your private student loan, you will need to contact the Consumer Financial Protection Bureau.

Terms You Need to Know

Loan Servicer - Handles billing and other services for your student loan(s). 

NSLDS - The National Student Loan Data System (NSLDS®) database is the U.S. Department of Education's central record for student aid, including student loans.

Original loan amount -the amount originally borrowed, including any origination fees

Current loan balance - the original loan amount plus any interest incurred

Grace Period - A set period of time before you must begin making payments.

Date repayment begins - your loan servicer will let you know when your first payment is due.