Repaying Your College Loans

Learn ten facts you may not know about repaying your college financial aid.

Think you’re done with college once you graduate or leave school? Well, if you’ve taken out college loans, some of your work is just beginning. Unlike college scholarships and grants, your college loans need to be paid back to the lender who funded your college education.

Before you know it, you’ll be asked to start repaying that money for college. This will start when you graduate, leave school or start taking classes less than half time. The more you know about how you’re expected to pay back that college money, the better off you’ll be when you start writing those checks.

Just finding loans, scholarships and grants to pay for college or university costs, like tuition and room and board, can be a challenge. Once you’ve graduated from school and want to put your college degree to good use, the last thing you’ll want to do is get tripped up in your college loans. Here are ten tips to keep you and your payments on track.

Ten Facts About Paying Back College Financial Aid

You’re responsible for paying the required loan amount on time, regardless of whether you receive a bill or repayment notice. To make sure you don’t miss paying your college money, add your payment due dates to your calendar. Failing to make payments could have serious consequences for your credit rating and could mean that you have to pay late fees in addition to your loan costs.
You also responsible for keeping your lender informed about any personal changes in your life, such as your address, name and phone number. Also, you should inform your lender if you change your school enrollment status, since this can impact when you start repaying your loan.
You will receive exit counseling sessions for your federal aid, in which your loan terms and conditions are explained to you. This occurs when you compete your college education, or when you leave school or cut down your hours. Before this session, be sure you’ve reviewed your loans and have written down any questions you have so you can get them resolved before the repayment process begins.
Carefully consider your repayment plan. With the standard plan, you’ll pay the same amount over 10 years. However, some lenders offer a variety of plans. To find the one right for you, consider your college money as well as your savings and anticipated income. For example, a graduated repayment plan starts with lower payments after you’ve finished your college program, and these payments are increased over time. The assumption is that your salary will gradually increase as well, making the higher payments more manageable.
Don’t panic if you choose a repayment plan that doesn’t work for you. Many lenders will allow you to adjust the plan to suit your personal needs. If money is tight now, for example, you can choose to extend your payments. Keep in mind, however, that the longer you’re paying your college loans, the more money for college you’ll be repaying overall.
For your federal aid, you will have a grace period after you graduate, leave school or go half-time before you start having to pay for college loans. Take some time during this period to create a realistic budget, select a repayment plan and determine how much money for a college loan repayment you can put aside.
Be sure to look at all of your options when it comes to repaying your college loans. Talk to the financial aid office at your college or university to find out if there are ways to offset your payments, such as teaching or volunteering with an organization like AmeriCorps.
Does your loan have fees associated with it? If you don’t know, you should find out from the lender. Otherwise, you may find that you receive less college money than you thought you were going to get, which could affect your ability to pay for your tuition and other college coasts.
If juggling a number of loans is your biggest struggle, considering consolidating your college loans. Your primary loans will be paid off and a new loan will be created, so you’ll only have one monthly payment to keep track of. Be sure to check the new loan’s interest rate and read the fine print to make sure you’re not giving up more than you’re getting for this added convenience.
If your financial situation changes, you do have options, although these options depend on the terms of the type of loan you have. Loan deferment allows you to not make payments if you meet certain conditions. Some actions that could result in deferment are obtaining a masters degree, performing a public service, serving in the military. If you can prove extreme financial struggles, you can qualify for forbearance and temporarily stop making payments or reduce your current payments.