Top 10 Student Loan Tips for Recent Graduates

Whether you are graduating or just taking a break from college, these tips will help you stay on top of your student loans. That means avoiding fees and extra interest costs, keeping your payments affordable, and protecting your credit rating.

1. Know Your Loans: It's important to keep track of the lender, balance, and repayment status for each of your student loans. These details determine your options for loan repayment and forgiveness. You can start by asking your lender. If that doesn't work, try visiting www.nslds.ed.gov. Once you log in there you can find out your total loan amounts, lender(s), and the repayment status of your federal loans. If some of your loans are not listed, they are probably private (non-federal) loans. For those, try to find the paperwork that you signed; contact your school if you cannot locate any records.

2. Know Your Grace Period: Different loans have different grace periods (how long you can wait after leaving school before you have to make your first payment). For Perkins loans the grace period is nine months; for Stafford and most other federal loans it's six months. The grace periods for private student loans vary, so consult your paperwork or contact your lender to find out.

3. Pick the Right Repayment Option: When your federal loans come due, your loan payments will automatically be based on a standard 10-year repayment plan. If the standard payment is going to be hard for you to cover, there are other options that can help you manage your debt, including alternative repayment plans and deferments. Extending your repayment period beyond 10 years can lower your monthly payments, but you’ll end up paying more – often a lot more – in interest over the life of the loan. The most important new option is the Income-Based Repayment program, which becomes available July 1, 2009 (before Spring 2009 grads have to start making payments on federal loans). It can cap your monthly payments at a reasonable percentage of income, and forgive any debt remaining after 25 years of payments. Forgiveness may be available after just 10 years of payments for borrowers in the public and nonprofit sectors (see #10 below).

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