If you’re anything like me, you probably neglected to read all the fine print when you first took out your student loans. Now it’s time to start repaying them, and you have no idea where to begin…
Lucky for people like us, many federal student loans have a grace period, which is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repaying your student loans. The grace period gives you time to get financially settled and to select your repayment plan. For those of you who have graduated within the last six months, chances are that time is almost up.
So to get you started, here are five things you should know about your student loans:
You may have federal loans, private loans, state loans, loans from your school, or some combination. Different loan types can have very different terms and conditions, so be sure you know what types of loans you’ve got.
To see all of your federal student loan information in one place, you can visit www.nslds.ed.gov. Once you log in, you can access a list of your federal student loans, including the loan type and information for your loan servicer. A loan servicer is the company that will handle the billing and payments on your federal student loans.
For all other types of loans, consult your records. If you have questions about the type of a loan, you can try contacting the financial aid office at the school you were attending when you took out the loan.
Once you’ve tracked down all of your loans, you’ll want to find out what your total loan balance is. This will help you determine a plan for repayment.
For your federal student loans, www.nslds.ed.gov will display your loan balance. For private and other student loans, you’ll want to check with your lender.
Remember, a student loan is just like any other loan—it’s borrowed money that will have to be repaid with interest. As interest accrues, it may be added to the total balance of your loan if left unpaid. As a recent graduate, you may want to consider making student loan interest payments during your grace period to save money on the total cost of your loan.
Federal student loans offer great benefits, including flexible repayment options. Some options include tying your monthly payment to your income, extending your payments over a longer period of time, or combining multiple loans into one.
Want to compare what your monthly payment would be under each of our repayment plans? Try our Repayment Estimator! Once you figure out which repayment option is right for you, contact your loan servicer to enroll in that plan.
For non-federal loans, you’ll want to check with your lender to see what types of repayment options are offered.
Repayment Terms and Benefits
Familiarize yourself with the repayment terms of all your loans. Here are some things to keep an eye out for:
Ways to save on interest, like enrolling in automatic debit
Ok, that’s a lot to take in, but hey, if you could survive the final exams, the all-nighters and even a crazy roommate or two, figuring out a plan for repaying your student loans should be a walk in the park. If any point you have questions or need advice, don’t hesitate to contact your loan servicer. That’s what they’re there for.
Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.
Let’s face it, repaying your student loans can be quite overwhelming, especially if you’re new at it. I may have spent my senior year of college interning at Federal Student Aid, but when my first student loan bill came in the mail, I’ll admit, I had no idea where to begin.
One of my first questions was, “Who do I pay?” I knew I had only federal student loans, but I kept getting letters and e-mails from Sallie Mae.* Why was that? If you asked yourself a similar question, this may help.
*Sallie Mae is my federal student loan servicer, but may not be yours. Here is a complete list of the federal student loan servicers.
Why am I receiving federal student loan bills from a company rather than the U.S. Department of Education?
Those bills you get in the mail are coming from one of the U.S. Department of Education’s federal student loan servicers. These loan servicers are companies that work on behalf of the Department of Education to help you understand your student loans and to facilitate payments.
Note: Even though you make your monthly payments to your loan servicer, your loans are still federal student loans and are owned by the Department of Education.
What can a loan servicer help me with?
Loan servicers do more than just collect payments from you. Your loan servicer is there to ensure that you, as a federal student loan borrower, get the customer service and repayment support you need to successfully repay your student loan.
How do I find out how many loans I have and who my loan servicer is?
To view information about all of the federal student loans you have received and to find contact information for your loan servicer, visit www.nslds.ed.gov and select “Financial Aid Review.” You will then be prompted to log in using your Federal Student Aid PIN, so make sure you have that handy.
Note: If you have multiple federal student loans, you may have more than one loan servicer, so make sure you click through each loan individually for information specific to that loan.
If you also have private student loans, I recommend getting a free copy of your credit report from www.annualcreditreport.com to identify them.
Not sure what kind of loans you have? It’s best to look at nslds.ed.gov and get a free credit report too. Then you’ll know about all of your loans right away.
Moral of the story: Your loan servicer is here to help.
Trust me, as a recent college graduate, I know how difficult it can be to make these payments every month. Truthfully, I still get anxious every time that payment comes out of my bank account. But that’s all the more reason to stay in touch with your loan servicer. Whether you’re having trouble making your payments or you just want advice about which repayment option is best for you, they can help.
Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.
Let’s face it. College tuition can be expensive. If you think about it in real terms, the annual cost of attending some colleges can equate to purchasing a new car each year. It seems absurd, right? Like many others, you might be wondering “How am I ever going to pay for college” and “Is there anything that I can do to lower my costs?” As a college graduate, current graduate student, and high school teacher, I’ve learned a few tricks on how to save on college:
Consider attending a community college first and transferring after two years. Some states, such as Virginia and California, offer guaranteed admissions to certain four-year institution of higher education for students who complete two years at a community college. You can get your prerequisite classes out of the way and save yourself quite a lot of money in the process. Additionally, SAT and ACT scores aren’t required to get into community college – another money-saving perk. Taking a path like this is a great way to prevent you from borrowing more money than needed.
Just because you are awarded a sum of money doesn’t mean that you have to borrow all of it. Look at your finances, your tuition/school costs, and borrow only what you need. If you want to accept less than what you were offered, let your school know ASAP because borrowing more than you need will cost you extra in the long run.
There is a lot of free money out there. That’s right. I said FREE money; so go find it! You can get it in the form of a scholarship – a sum of money awarded to students to help pay for school. Scholarships are different than loans in that they do not need to be paid back; they are completely free. So, look into applying for scholarships before borrowing a loan. There are thousands of scholarships out there. Scholarships come in all forms – large, small, national, local, etc. On top of that, there are scholarships catered for people of certain ethnicities, locations, majors, religions, skills, along with many other classifications. Think of any topic, and there is probably a scholarship for it – the best homemade duct tape prom outfit, a scholarship for being tall, and a candy technology scholarship. So, my advice is: look into applying for scholarships before borrowing money. Check out College Board’s Scholarship Search to find scholarships that fit your individual characteristics.
In order to reduce the amount of money that you need to borrow, consider getting a job while you attend school. You might even be able to find a part-time job somewhere – perhaps the school library or IT help desk – that allows you to study while you work. Additionally, there are federal and statewide work study programs that can help you earn money to help pay for college, reducing the amount you need to borrow.
When borrowing loans, choose federal student loans over private student loans. If you receive a federal loan, it will have a fixed interest rate , whereas private loans may fluctuate. Moreover, federal loans offer many options for repayment, forbearance, and deferment. Learn more about the differences between federal and private loans.
It’s always a nice feeling to save money. So, make sure to explore all of the money-saving options available to you, and you might be able to alleviate some of your college expenses. If you have any other questions or concerns about saving on college, visit StudentAid.gov.
Kelly Jubic is a digital engagement intern at Federal Student Aid.
I’m not afraid to admit that being a college senior is a little frightening (okay, slight understatement-it’s extremely frightening!) As the Class of 2013 prepares to say goodbye to the comforts of our college community and say hello to the real world, we are faced with many realities. Where will I live? How am I going to find a job? Will I make ends meet? Will I be happy?
And with all these new exciting challenges and responsibilities, one of the last things on most of our minds is repaying our student loans. Yet it’s one of our responsibilities and we should be prepared for when the first bill arrives in the mail.
I will be honest in saying that this repayment process is a little intimidating, and before writing this post I was at a loss of where to begin. Luckily, the Department of Education’s Office of Federal Student Aid (FSA) has tools available to walk soon-to-be grads through the loan repayment process:
Exit Counseling: Recently redesigned to be more interactive, Exit Counseling provides important information to student borrowers who are preparing to begin student loan repayment. Exit counseling is required when you graduate, leave school, or drop below half-time enrollment, so talk to the financial aid office at your school about completing it.
Federal Loan Repayment Plans: Understanding the details of repayment can save you time and money. Find out when repayment starts, how to make your payment, repayment plan options, what to do if you have trouble making payments, and more!
Repayment Estimator:Federal Student Aid recently launched a Repayment Estimator that allows you compare your monthly student loan payment under different repayment plans to help you figure out which option is right for you. Once you log-in, it will automatically pull in all of your federal student loan information so you can compare repayment plans based on your specific situation.
So with all of these great resources, I’ve found that things are clearer, and not quite as scary. Class of 2013 we are about to embark on a new adventure, best of luck to each and every one of you!
Spring is here, college finals are looming, commencement speakers are being announced, and before long, a new group of college graduates will need to start thinking about paying back their student loans. Earlier this week, the Department of Education announced new tools that will help recent college grads better understand their loan debt and stay on track in repayment.
These two new features include a Complete Counseling Web page and a new Repayment Estimator that lets the borrower easily compare monthly payment options under the seven repayment plans available. Both tools are part of the Obama Administration’s ongoing effort to help students and families make informed and sound financial decisions throughout each step as they pursue their higher education goals.
During his State of the Union address in February, President Obama unveiled the new College Scorecard to help empower students and families with more transparent information about college costs and outcomes. The Scorecard provides clear, concise information on cost, graduation rates, loan default rates and the amount families borrowed for every degree-granting institution in the country. The College Scorecard, along with the resources from Federal Student Aid, will help students take the right steps, financially and academically, to achieve their college degree.
As many know, managing loans can often be confusing and overwhelming for college students, and we want to ensure that graduates have access to tools that will help them successfully navigate this process. We encourage federal student loan borrowers to log in at StudentLoans.gov to take advantage of these new resources today!
If you’re a student thinking about college or career school or a borrower already in repayment, the U.S. Department of Education’s office of Federal Student Aid has launched some exciting new tools to help you through the financial aid process.
StudentAid.gov is a new website that provides straightforward and easy-to-understand information about planning and paying for college. The site combines content and interactive tools from several ED websites.
StudentAid.gov offers more than just information in an easy-to-read format; it also features videos and infographics to help answer the most frequently asked questions about financial aid.
As a mobile-optimized website, StudentAid.gov is fully accessible on tablets and smartphones. StudentAid.gov’s new look was tested with students, parents and borrowers, and we will continue to make improvements and updates based on your feedback.
Some New Features
Income-Based Repayment Calculator: If your student loan debt is high but your income is modest, you may qualify for the Income-Based Repayment Plan (IBR). To find out whether you might be eligible to repay your loan under IBR, use our new IBR calculator.
Videos: We’ve developed videos to help make the financial aid process easier to understand. We’ll continue to roll out new videos and update our playlists on the Federal Student Aid YouTube channel.
Infographics: Our infographics will help you understand what steps you need to take to get money for college or career school.
Social Media: In addition to StudentAid.gov, Federal Student Aid has also launched Twitter, Facebook and YouTube to offer you alternative options to learn about the student aid process.
If you would like to learn more about these new resources, @usedgov will be interviewing @FAFSA on Twitter on July 25th at 6pm ET to highlight some of the helpful new features that are available. Whether you’re just starting to think about college or career school, currently enrolled or in the repayment process, we encourage you to join the conversation.
Here’s how it works:
– Have suggestions or questions about the new resources that are available? You can start submitting them on Twitter today. Be sure to include the #AskFAFSA hashtag in your tweets. We’ll continue to take questions throughout the week and during the live event.
– On Wednesday,July 25th, at 6pm ET, follow @usedgov & @FAFSA or the #AskFAFSA hashtag on Twitter to join the conversation. Suggestions and questions are encouraged!
– Can’t make the live session? A summary of #AskFAFSA Office Hours, including the full Q&A, will be posted on Storify and the ED.gov blog following the event.
Over the past several years, the Obama Administration has worked to improve repayment options available to responsible student loan borrowers. Since 2009, former students have been able to enroll in an “Income Based Repayment” (IBR) plan to cap their student loan payments at 15 percent of their current discretionary income if they make their payments on time.
In 2010, President Obama signed into law an improved income-based repayment plan that would lower this cap to 10 percent of discretionary income for students who take out loans after July 1, 2014. Then, last October, the President announced an executive action to make that lower cap available to more borrowers by the end of 2012, rather than 2014. The latest change will likely reduce monthly student loan payments for more than 1.6 million responsible student borrowers.
Despite these opportunities and policy improvements to help graduates make their monthly payments, too few responsible borrowers are aware of their repayment options. Even among borrowers who understand their options, many have difficulties navigating and completing the application process.
Today, President Obama is introducing a Presidential Memorandum that will help educate more students about their loan repayment options and streamline the IBR application process. Read through the questions below to learn more about income based repayment and how these changes might affect you.
1. What is income-based loan repayment?
Income-Based Repayment (IBR) is a repayment plan that caps your required monthly payments on the major types of federal student loans at an amount intended to be affordable based on income and family size. All Stafford, Grad PLUS, and Consolidation Loans made under either the Direct Loan or Federal Family Education Loan programs are eligible to be included in the program. Non-federal loans, loans currently in default, and Parent PLUS Loans are not eligible for the income-based repayment plan.
The program lowers monthly payments for borrowers who have high loan debt and modest incomes, but it may increase the length of the loan repayment period, accruing more interest over the life of the loan.
2. Who qualifies for IBR?
IBR helps people whose federal student loan debt is high relative to income and family size. Currently, your loan servicer (the company you make your loan payments to) determines your eligibility, but starting in September 2012, students won’t have to contact their loan servicer to apply—they will be able to apply directly through the Department of Education’s website, thanks to a new directive from President Obama.
You can use the U.S. Department of Education’s IBR calculator to estimate whether you are likely to qualify for the plan. The calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment you are paying on your eligible loans under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.
3. Will my eligibility change if I’m married? What if my spouse also has loans?
If you are married and file a joint federal tax return with your spouse, both your income and your spouse’s income are used to calculate your IBR monthly payment amount.
If you are married and you and your spouse file a joint federal tax return, and if your spouse also has IBR-eligible loans, your spouse’s eligible loan debt is combined with yours when determining whether you are eligible for IBR. If the combined monthly amount you and your spouse would pay under IBR is lower than the combined monthly amount you and your spouse are paying under a 10-year standard repayment plan, you and your spouse are eligible for IBR.
4. How will enrolling in IBR affect my monthly payments compared to the standard repayment plan?
It depends on your income. But, take for example a nurse who is earning $45,000 and has $60,000 in federal student loans. Under the standard repayment plan, her monthly repayment amount is $690. The currently available IBR plan would reduce her payment by $332, to $358. President Obama’s improved “Pay As You Earn” plan — reducing the cap from 15 percent to 10 percent — will reduce her payment by an additional $119, to a more manageable $239 — a total reduction of $451 a month.
6. How will enrolling in IBR affect my payments over the life of the loan compared to the standard repayment plan?
In general, your payments will increase as your income does, but they will never be more than they would have been under the standard 10-year repayment plan. Although lower monthly payments may be better for some borrowers, lower payments may also mean you make payments for longer and the longer it takes to pay your loans, the more interest you pay compared to the standard repayment plan.
7. Is it possible my payments will be higher under IBR than they would under the standard repayment plan?
IBR will never cause your payments to increase more than they would have been under the standard repayment plan. It is possible, however, that your income and the size of your outstanding loan balance may mean that IBR is not beneficial to you. If your payments would be higher in IBR than they would be in the standard repayment plan, the IBR option will not be available to you.
Also, because a reduced monthly payment in IBR generally extends your repayment period, you may pay more total interest over the life of the loan than you would under other repayment plans.
8. How do I opt in to IBR?
To sign up for IBR, call your loan servicer. The loan servicer is the company that sends you your monthly student loan bills. If you don’t know who your servicer is or would like more information about your loans, such as the balance and interest rates, you can look it up on www.nslds.ed.gov. To see a list of and contact information for common servicers of student loans held by the US Department of Education, you may visit the Loan Servicer page.
9) What does today’s Presidential Memorandum mean for IBR?
The PM will do three things:
Streamline the IBR application process: The Department of Education, in collaboration with the Treasury Department and Internal Revenue Service, will create a streamlined online application process for IBR that allows student loan borrowers with federally held loans to import their IRS tax return income data directly into the IBR application. This process will allow income information to be seamlessly transmitted so that borrowers can complete the application at one sitting. Federal direct student loan borrowers will no longer be required to contact their loan servicer as the first step to apply.
Enhance online and mobile resources for loan repayment options and debt management: The Department of Education will create integrated online and mobile resources for students and former students to use in learning about Federal student aid, including an explanation of the various options to cap monthly payments based on income. The Department will also develop and make available to borrowers an online tool to help students make better financial decisions, including understanding their loan debt and its impact on their everyday lives. This tool would incorporate key elements of best practices in financial literacy and link to students’ actual Federal loan data to help them understand their individual circumstances and options for repayment.
Increase awareness of IBR: The Department of Education will instruct Federal direct student loan servicers to make borrowers aware of the option to participate in IBR before a student leaves school and upon entering repayment. The Department of Education will make available for institutions of higher education a model exit counseling module that will enable students to understand their repayment options before leaving school and to choose a repayment plan for their student loans that best meets their needs.
President Barack Obama delivers remarks on college affordability while speaking at the football practice field at the University of Michigan's Al Glick Field House in Ann Arbor, Mich., Jan. 27, 2012. (Official White House Photo by Pete Souza)
In the State of the Union, President Obama made a point to talk about two critically important trends when it comes to education.
First, if you look at unemployment rates broken down by education level, you’ll notice something stark: Those without a college diploma are twice as likely to be without a job as those who earned a bachelor’s degree. For those who finished college or received more education still, the unemployment rate is just 4.1 percent—less than half the national average. And even among the employed, those who finished college make twice as much as those who failed to finish high school.
But even as a college degree has become more important than ever, the cost of that diploma has [begun to] skyrocketed. For the first time, Americans owe more on their student loans than they do on their credit cards. A senior in high school today has seen the cost of full-time attendance at a public university nearly double in her lifetime.
This morning at the University of Michigan in Ann Arbor, the President outlined a Blueprint for making college more affordable.
If you need help paying for college, Federal Student Aid can help. Each year, Federal Student Aid, an office of the U.S. Department of Education, provides more than $150 billion in higher education grants and loans to students attending college—but to qualify, you must complete the Free Application for Federal Student Aid (FAFSA).
The FAFSA is used for all federal grants and loans as well as for many state and institutional student aid programs. Remember, applying is FREE and there is no income cut-off to qualify for federal student aid. However, some aid is distributed on a first-come, first-served basis so it is important to apply early.
You can complete the FAFSA for the upcoming 2012-2013 school year now at www.fafsa.gov. The online application is the quickest and easiest way to apply for aid.
The online application minimizes the number of questions you must complete by using your responses to eliminate additional questions that do not apply to you. It also allows you to retrieve your tax information directly from the IRS to populate many of the financial questions on the FAFSA. These improvements have helped reduce the average time it takes to complete the FAFSA by one third, from 33 minutes to 22 minutes.
In order to help you make informed decisions about college, the online FAFSA also provides you with important information about the schools you may be interested in attending, including school type, tuition costs, and net price, as well as graduation, retention, and transfer rates. The FAFSA website also offers information on the financial aid process and explains the various types of federal student aid available.
If you have questions when completing your FAFSA, we have lots of help available through our Contact Us page on www.fafsa.gov. You can contact us by:
Using Live Help, a secure online chat session where you can ask our customer service representatives a question;
Calling 1‑800‑4‑FED‑AID (1‑800‑433‑3243) or 319‑337‑5665; or
You can also follow us on our new Twitter handle @FAFSA to get the answers to some of the most commonly asked questions about completing the FAFSA. Or, you may want to attend our FAFSA Twitter town hall on January 26 at 4:30 p.m. Eastern Time to have your FAFSA questions answered live by the U.S. Department of Education Under Secretary Martha Kanter.
We are looking forward to receiving your FAFSA soon. To learn more, please visit www.fafsa.gov.
James Runcie is Chief Operating Officer of Federal Student Aid
Last night President Obama unveiled a new blueprint for an America Built to Last, that gives hard-working, responsible Americans a fair shot. Education plays a key role in the President’s Blueprint, and includes the following details:
Forge new partnerships between community colleges and businesses to train and place 2 million skilled workers.
Reform job training and Unemployment Insurance to help put more Americans back to work.
Keep students in high school by calling on every state to do what 20 states have already done: require students to stay in school until they graduate or turn 18.
Attract, prepare, support, and reward great teachers to help students learn:
The President is asking for a new competitive program that will challenge states and districts to work with their teachers and unions to transform the teaching profession by:
Reforming colleges of education and making these schools more selective;
Creating new career ladders for teachers to become more effective, and ensuring that earnings are tied more closely to performance;
Establishing more leadership roles and responsibilities for teachers in running schools; improving professional development and time for collaboration among teachers; and providing greater individual and collective autonomy in the classroom in exchange for greater accountability;
Creating evaluation systems based on multiple measures, rather than just test scores;
Re-shaping tenure to raise the bar, protect good teachers, and promote accountability.
Take steps to hold down college costs for middle-class families:
The President called on Congress to help keep college costs within reach for middle-class families by:
Keeping tuition from spiraling too high: The President is proposing to shift some Federal aid away from colleges that don’t keep net tuition down and provide good value.
Preventing student loan interest rates from doubling: The President called on Congress to stop the interest rate on subsidized Stafford student loans from doubling on July 1 of this year, so young people don’t have as much debt to repay.
Doubling the number of work-study jobs: The President wants to reward students who are willing to work hard by doubling over five years the number of work-study jobs for college students who agree to work their way through school.
Permanently extending tuition tax breaks that provide up to $10,000 for four years of college: The President is proposing to make the American Opportunity Tax Credit permanent, maintaining a tax cut that provides up to $10,000 for tuition over four years of college.
For those of you who may need help paying for college, a new year means it’s time to complete a new FAFSA.
We understand the financial aid process can often be overwhelming, especially if you’ve never gone through it before. To help you navigate the process, we are very excited to announce the launch of the @FAFSA Twitter account from Federal Student Aid.
The @FAFSA Twitter account will help support an ongoing conversation around student financial aid, and to kick this off, Martha Kanter, the Under Secretary of Education, will host “FAFSA Office Hours” where she will solicit and answer students’ FAFSA questions live on Twitter using the #askFAFSA hashtag. The event will take place on January 26th at 4:30pm (EST) and will be the first in a monthly series of Q&A sessions that Federal Student Aid will host on Twitter.
Here’s how it works:
Follow @FAFSA on Twitter for FAFSA information and financial aid tips.
Ask your questions now and during the live event on Twitter using the hashtag #askFAFSA
Follow the Q&A live through the @FAFSA Twitter account
Can’t make the live session? A summary of the live chat including the full Q&A will be posted on the ED.gov blog following the event.
The FAFSA is the Free Application for Federal Student Aid. It’s the form to fill out in order to apply for student grants, work-study, and loans. To receive federal student aid for the 2012-13 school year, you must complete the 2012-13 FAFSA at www.fafsa.gov. Some financial aid is first-come, first-served, so we encourage all potential and returning students to complete the FAFSA as soon as possible. Remember, four-year colleges and universities aren’t the only schools that accept the FAFSA Community colleges, nursing schools, online schools, and career schools do too. More than 6,000 schools accept FAFSA!
We hope you will find this to be a great resource as you pursue your education, so let us know how we can help. Remember, you can complete the FAFSA online today at www.fafsa.gov.
The U.S. Department of Education’s office of Federal Student Aid