first glance at your student loan debt after college is
likely to be a nauseating encounter.
if you are like a lot of graduates, you may stick the
paperwork in a drawer and try not think about it. Or you
might sign up for payments without giving it much
would be a mistake.
15 percent of student loans go into default within three
years of a student graduating, but no one needs to
default ó or miss the payments, says Reyna Gobel,
author of "CliffsNotes Graduation Debt: How to
Manage Student Loans and Live Your Life." If you
have a federal student loan you canít afford, the
government will give you a break so you can handle it.
you have to make sure you donít undermine your best
opportunities by being either inattentive or too quick
on the draw.
example, you will have options for repaying your loans
and will be asked to sign up for them. Gobel says to
wait to see if you can handle your typical payments
before making a commitment. You have a six-month grace
period after college to test your ability to pay. During
this time, you donít have to make payments. But rather
than spend all the money you have, Gobel suggests
figuring out what your regular payment would be ó
either the full monthly payments required if you pay off
your loans in a typical 10-year period, or whatís
known as an income-based repayment.
payments reduce your loan payments to fit your income,
and your loan servicer can help you calculate what your
payments would be with the regular payments over 10
years or the income-based payments.
the grace period, put the full payments into the bank to
make sure you can handle all your bills while making
those payments. In addition, Gobel says, those payments
left in the bank will become your emergency fund. You
wonít use them in the future to pay your college
loans. Rather, they will stay there in case you lose
your first job quickly or find out itís not meant for
you and you want to change jobs.
youíve had a period when paying bills after college,
you donít really know what you can afford in student
loan payments," Gobel said.
after practicing for a few months, you will be ready to
commit to either the low income-based repayments or
regular payments over 10 years. To figure out your loan
payments, find your outstanding loans through the
National Student Loan Data Systemís website, at
use this loan repayment calculator to figure out your
monthly payments if you take the typical 10 years to
make regular payments: .
reluctant about consolidating loans and stretching
payments longer than 10 years if there is a chance you
might have a public-service type of job soon or in the
future. Under a government program, after making
income-based payments on your loans for 10 years, you
can get the remaining debt forgiven if you are in
certain jobs. But if youíve made the mistake of
extending your loan payments over 20 or 30 years, you
wonít get the break on your payments after 10.
the jobs that might qualify are quite broad, Gobel said.
Even being a doctor or a human resources director at a
hospital might qualify. About 25 percent of jobs do
qualify, she said. Remember that whatís important is
paying loans for 10 years. You can take time off from
paying loans, perhaps while having a child or going back
to school, and get your loans forgiven in a public
service job if you make 10 years of payments.
Gobel said rather than making regular payments, choose
the income-based lower payments if possible and try to
save money for your future.
you go back to college, donít try to make payments on
your student loans while there, she said. The old loans
are likely to have lower interest payments than the new
ones you will take out for graduate school. So keeping
the low-interest loans intact may make it possible for
you to borrow less under the more expensive graduate
school loans offered by the government.