Are college graduates prepared for their student loan payments?

USA Funds offers ‘final exam’ for student loan borrowers

INDIANAPOLIS — As members of the Class of 2009 leave college campuses, USA Funds^®, the nation’s leading education loan guarantor, offers a “final exam” to help them check their preparedness to handle the student loan payments they will have to begin making in the coming months.

“Given the tough job market many college graduates face, knowledge of the repayment and payment relief options available on federal student loans could save graduates hundreds of dollars in unnecessary interest, late payment or loan default costs,” said Gregory A. Ayers, USA Funds senior vice president, policy and administration. “USA Funds offers a comprehensive financial literacy program, borrower counseling programs, and an online borrower portal, to help students prepare to manage their college debt.”

Most federal student loans offer a grace period after students leave college before they must begin making payments.

Recent college grads can test their student loan repayment preparedness by answering a few basic questions.

• Do you know how much student loan debt you owe and what your monthly loan payments will be? The first step in preparing for student loan payment is to make an inventory of all outstanding student loans and estimate the monthly payments. Borrowers with loans guaranteed by USA Funds can check their loan information through USA Funds Loan Solutions^SM at usafundsloansolutions.org. Borrowers also can check the National Student Loan Data System of the U.S. Department of Education. Knowing the amount owed and interest rates, college graduates can estimate their monthly loan payments by using an online calculator, such as the one available from the Borrowers section of the USA Funds Web site.
• Have you made a budget — or revised the budget you followed while in college — to ensure your spending doesn’t exceed your income? Recent graduates should draw up a monthly budget of income and expenses, and include in the expenses their monthly student loan payments.
• Do you understand your options if you can’t afford your student loan payments? Federal student loan borrowers can select from among several payment plans, including equal monthly payments, payments that are lower in the early years and rise later in the repayment term, and payments that are tied to a borrower’s income. Some borrowers also may qualify to extend the payback period and thereby reduce their monthly payments, or limit payments to a percentage of their discretionary income. Borrowers who need a temporary reprieve from their loan payments may qualify for deferment — if they meet specified conditions of unemployment or economic hardship — or forbearance — which they typically must request from their lender — to temporarily reduce or delay their loan payments.
• Do you know whom to contact if you need assistance with your student loans? Student loan borrowers should make a list of the addresses, toll-free phone numbers, e-mail addresses and Web sites of the organizations that own or manage their student loans. Recent grads who can’t find that information can look it up in USA Funds Loan Solutions, if they have loans guaranteed by USA Funds, or in the National Student Loan Data System.

“Student loan borrowers who have questions or need assistance with their student loans shouldn’t hesitate to ask their student loan service provider for help,” Ayers said.