HESC Reminds Grads to Prepare for Student Loan Repayment

ALBANY, NY (12/03/2008)(readMedia)-- Recent spring college graduates are being reminded their six-month grace period for repaying federal student loans will soon end.

The New York State Higher Education Services Corp., the state agency that helps people pay for college, reminds borrowers that planning now will help smooth the transition from college student to career person with new financial responsibilities.

"It's exciting to graduate from college, find a new job, and get your own apartment," said James C. Ross, president of HESC. "Independence brings new financial responsibilities, so establishing a budget and student loan repayment plan is very important," he added.

"HESC has an array of tools and calculators on its Web site at www.hesc.org to help new college graduates prepare for federal loan repayment," Ross continued.

Here are some tips to help manage student loan debt and work toward a successful financial future:

Choose a repayment plan. After graduation, leaving school, or dropping below half-time enrollment, borrowers have six months before repayment begins. A repayment plan is arranged with the lender during this grace period.

Options include a standard repayment plan with equal monthly payments of at least $50 with a maximum of 10 years to repay; a graduated schedule starting with a low monthly payment that will gradually increase; or an income-sensitive repayment plan based on income.

Establish a good credit history by repaying student loans on time.

Develop and stick to a budget and live within your income. Use a budget worksheet and update it regularly. Budgeting assistance and planning tools are included on the HESC Web site.

Use credit cards sparingly and avoid using them for everyday expenses such as groceries or gas purchases. Pay cash for day-to-day expenses and keep credit cards for emergencies or for big-ticket items needed to accomplish long-term goals.

Keep in touch -- contact your lender about any changes in status or anything affecting your ability to repay the loan. Changes may include transferring to another school, name or address change, leaving school, graduating, unemployment, or a serious or lengthy illness.

Contact your lender immediately if you have a problem making your student loan payments. Ask the lender for forbearance or a deferment to adjust or suspend your payments temporarily if needed.

A deferment may be granted if you are enrolled in school, engaged in military service, graduate study, are unemployed, or experiencing an economic hardship.

Forbearance is a way of temporarily lowering or postponing federal student loan payments. Forbearance is granted only by the lender.

Don't let payment problems get out-of-hand...work with the lender at the first sign of difficulty.

If you can't resolve a repayment problem with your school, lender, or guarantor on your own, a federal ombudsman will help resolve the dispute informally - find one at the federal Web site at www.ombudsman.ed.gov.

Managing student loan repayment will help you meet new responsibilities, avoid financial difficulties, and assure a good credit record for the future.

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