Six student loan tips for new graduates

Student loan repayment information can be overwhelming or confusing to new graduates.

“The time to get everything in order is before your first payment comes due,” advises Carrie Johnson, NDSU Extension Service personal and family finance specialist.

Here are some tips to help lessen the confusion:

– Know what and whom you owe. Key websites to help you find that information: federal (Direct and Perkins) loans, National Student Loan Data System (www.nslds.ed.gov/npas/index.html); private student loans, check your credit report. To receive a free credit report from each of the three credit bureaus, visit AnnualCreditReport.com (www.annualcreditreport.com/index.action).

– Adjust your budget. Make sure to include your new payment in your household budget. If you need to make adjustments to other expenses because of the new payment, make sure to do that before your new payment is due.

– Determine what payment plan is right for you. A number of repayment plans are available for federal student loans. The standard repayment plan allows you to pay your student loans off in 10 years and reduce the amount of interest you pay. But if you need a lower monthly payment, an income-driven repayment plan might be best.

To calculate your monthly payment under each plan, use the repayment estimator on the studentloans.gov website (https://studentloans.gov/myDirectLoan/index.action). After logging in with your FSA ID, enter your income and family size.

– If you can’t make your payments, contact your loan servicer right away. You may be eligible for a deferment or forbearance to delay your payments for a short time. Servicers and lenders usually are willing to work with you so you do not default on your student loan payment.

– Never pay someone to help you consolidate your federal student loans. Companies are willing to do the consolidation paperwork for you, but at a cost. Federal student loan consolidation is free if done on the studentloans.gov website (https://studentloans.gov/myDirectLoan/index.action). Completing the online form takes about 30 minutes. If you have questions or need assistance, use the contact information on the website.

– Be careful when consolidating your federal and private student loans. A consolidation is a new loan that pays off all of your existing loans. It makes repayment a little easier because you only have one loan payment to remember, it shortens the length of repayment and can save you a lot of money in interest. However, if you consolidate your federal loan with a bank, it no longer is a federal student loan and you will lose repayment benefits. For example, you would not be able to request a deferment or forbearance.

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