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You're in college going to classes, studying, spending time with friends. The idea of repaying your student loans is about as far from your mind as retirement.
What if we told you that what you do now -- while you're in college -- could impact your life not at graduation, but many years from now when you are well into your middle age and beyond? Consider this fact: Repayment of your student loans may last 10-25 years once you have graduated. If you default and fail to pay your loan obligations, you could face wage garnishment and other credit troubles down the road.
About loans
About loans
Direct Subsidized: Offered to undergraduate students with financial need. They do not accrue interest while a student is in school.
A solid history of student loan repayment will impact your credit score which, in turn, affects your ability to get a car loan, rent an apartment, and get credit for other purchases. So make your repayment a positive mark on your credit.
It's important to build good credit habits now so that when you enter repayment (6-9 months after you graduate or leave school for federal student loans and varying repayment for private lenders) you will be ready to handle the responsibility. Follow these steps now to avoid problems later:
- Stay organized
- Pay on time
- Stick to your budget and spending plan
When you graduate, here are the steps you follow into student loan repayment:
- Online exit counseling: Complete this immediately upon graduation if you have federal loans. This counseling discusses repayment options and offers other helpful advice.
- Grace period: You begin repayment 6-9 months after graduation for federal loans; terms for private loans vary
- Repayment: This can range from 10-25 years of your adult life, depending upon the repayment type you choose
- Track your credit: Visit nslds.ed.gov for details about your federal loans; visit www.annualcreditreport.com to track your overall credit (you can receive one free credit report each year from each of the three major credit reporting bureaus: Experian, Equifax and TransUnion)
Direct Unsubsidized: Available to undergraduate and graduate students. Interest accrues while a student is in school.
PLUS Loan: Available to parents of undergraduate students and graduate students. Interest accrues while a student is in school.
Private loans: Offered through a variety of banks and lenders. Loan fees and repayment terms vary.
Repayment plans can include a standard plan, graduated plans that have low payments that increase gradually or income-based plans that are based upon your annual income. There are also cancellation and forgiveness programs for graduates who work in a public service or teaching job.
As you enter loan repayment, make it a priority in your budget. Be sure to make your loan payments on time, every time. You can make it easier on yourself by following these tips:
- Set up online accounts immediately with the financial company that services your loan
- Keep your accounts updated with current contact information
- Check the accounts often to be sure everything looks to be in order
- Consider automatic payments, which may result in an interest rebate
- Stay organized by keeping track of your loans, payments and any correspondence in a notebook or spreadsheet. Consider setting up a dedicated email account to track this business -- and be sure to check it regularly
If you encounter problems after you are in repayment, ask for help and don't wait until you fall delinquent or default on your loans. You may be able to apply to have your loan deferred or reduced. Your loan servicer can help you and the U-M Office of Financial Aid also assists U-M graduates who need help navigating through loan repayment.
For more about loan repayment visit these websites:
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