As May Grads Exit Their Grace Period, NASFAA Provides Tips on Selecting a Repayment Plan
Nov. 15, 2012, Washington, DC -- It’s fall, and as recent college graduates unpack their scarves and fuzzy sweaters, they should also begin thinking about student loan repayment.
“As May graduates approach the end of their six-month grace period on federal Stafford loans, now is the time to begin thinking about how they will manage loan payments when the bills come due,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators (NASFAA). “Determining the best repayment strategy for you and your family is absolutely critical, because no one benefits from student loan default—not schools, not lenders, not taxpayers, and most certainly not students, who could suffer the negative effects of that credit damage for years to come.”
Resources from NASFAA
To forestall default and encourage successful loan repayment, the U.S. Department of Education offers numerous repayment options for federal student loans, including:
Source: U.S. Department of Education
It’s important to remember that these repayment options only apply to federal loans. If you have private or alternative loans—nonfederal loans made by a lender such as a bank, credit union, state agency, or a school—be sure to check with your lender about the terms of your repayment.
Private loans are not eligible for IBR or the other federal loan payment plans, deferments, forbearances, or forgiveness programs. However, the lender may offer some type of forbearance or payment relief. Read your private loan paperwork carefully and then talk to the lender about what repayment options they may offer.
If you aren’t sure how you’ll make any loan payment at all, don’t panic.
“Federal student loans are structured to include many borrower-friendly features. If you're unable to make payments because of medical issues, unemployment, or other financial challenges, there are legitimate ways to temporarily postpone your federal loan payments, such as deferments and forbearance,” said Draeger. “Just beware: in some cases interest still accrues, so you may want to consider making interest-only payments if you are able.”
For more information on planning and paying for college, visit the “Students, Parents, and Counselors” section of www.studentaid.org.
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents approximately 20,000 financial aid professionals at 3,000 colleges, universities, and career schools across the country. Each year, financial aid professionals help more than 16 million students receive funding for postsecondary education. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.
Publication Date: 11/15/2012