4 Common Student Loan Mistakes

It’s been hard to come to terms with, but I need to face the facts: I’m not in college anymore. In fact, this January marks two years since I started repaying my student loans. I know, not the most exciting thing in the world, but important. So while I don’t claim to be a student loan expert, I have learned a lot of lessons along the way, mostly through trial and error. In hopes that you won’t make the same mistakes I did, here are some things I wish I had known before I started repaying my student loans:

  1. Girl with CalculatorI should have kept track of what I was borrowing.

Let’s be real. When you take out student loans to help pay for college, it’s easy to forget that that money will eventually have to be paid back … with interest. The money just doesn’t seem real when you’re in college, and I didn’t do a good job of keeping track of what I was borrowing and how it was building up. When it was time to start repaying my loans, I was quite overwhelmed. I had different types of loans and different interest rates. When I did eventually see my total loan balance, I was pretty shocked.

You can avoid this problem. Had I known there was a super easy way to keep track of how much you’ve borrowed in federal student loans, I would have been much better off. Just go to nslds.ed.gov, select “Financial Aid Review,” log in, and you can view all of your federal student loans in one place! How did I miss that?

  1. I should have made interest payments while I was still in school.

If you’re anything like me, you probably consumed your fair share of instant noodles while trying to survive on a college student’s budget. Trust me, I get it. But one thing I really regret when it comes to my student loans is not paying interest while I was in school or during my grace period. Like I said, I was far from rich, but when I was in college, I did have a work-study job and waited tables on the side. I probably could have spared a few dollars each month to pay down some student loan interest. Remember, student loans are borrowed money that you have to repay with interest and more importantly, that interest may capitalize, or be added to your total balance. My advice: Even though you don’t have to, do yourself a favor and consider paying at least some of your student loan interest while you’re in school. It will save you money in the long run.

     3. I should have kept my loan servicer in the loop

If you’ve recently graduated and haven’t heard from your loan servicer, make sure you check that your loan servicer has up-to-date contact info for you. When I graduated and moved into my first big-girl apartment, I forgot to change my address with my loan servicer. I found out that all of my student loan correspondence was going to my mom’s address. I hadn’t even thought to update my loan servicer with my new contact information. Don’t make the same mistake I did. Keep your servicer informed of address, e-mail, and phone changes.

  1. I should have figured out what my monthly loan payments were going to be BEFORE I went into repayment.

By the time my grace period was over, I had a decent idea of how much I had borrowed in total, but I had no idea what my monthly payments would be. I thought I was fine. I had started my new job and been paying rent and other bills for about six months. Then my grace period ended, and I got my first bill from my loan servicer. It was definitely an expense I hadn’t fully taken into account.

Don’t make the same mistake. Luckily for you, Federal Student Aid recently launched a repayment estimator that allows you to pull your federal student loan information in order to compare your monthly payments under different repayment plans side by side. That way, you know what to expect and can budget accordingly … unlike me.

I’ll be the first to admit that this whole process can seem a little overwhelming, especially when you’re new at it. But just remember, your loan servicer is there to help you. If you have questions or need advice, don’t hesitate to contact them.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

5 Things You Need To Know About Your Student Loans

info-person at computerIf 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:

  1. Loan Types

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.

  1. Loan Balance

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.

  1. Loan Interest

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.

  1. Repayment Options

Depending on the types of loans you have, you will have different repayment options.

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.

  1. Repayment Terms and Benefits

Familiarize yourself with the repayment terms of all your loans. Here are some things to keep an eye out for:

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.

Which Student Loan Repayment Plan Should You Choose?

If you graduated from college within the last six months, you have probably been contacted by one of the U.S. Department of Education’s loan servicers, reminding you that it’s almost time to begin repaying your student loans.

Your loan servicer will automatically enroll you in our Standard Repayment Plan unless you tell them otherwise. Under a Standard Plan, your payments will be fixed over a 10-year period of time.

But, this isn’t your only option. Did you know that the Department offers several different repayment plans? You can read more about that below or you can  try our repayment estimator to find out which repayment plan is best for you. Just log in, and the tool will pull your federal student loan information and allow you to compare our different repayment plans side by side:

Here are the details on each repayment plan we offer:

Repayment Estimator Graphic

Standard Repayment Plan

The most basic type of repayment plan is the Standard Repayment Plan. This is the default plan for most types of student loans. It breaks down your loan balance into monthly payments of at least $50 for up to ten years. In general, this is the plan that will cost you the least amount of money in interest payments.

Graduated Repayment Plan

Under the Graduated Repayment Plan, monthly payments start out low and increase every two years during the 10-year repayment period. This plan is best for borrowers whose income may start out low but is expected to increase. One downside is you will pay more in interest than you would under the Standard Repayment Plan.

Extended Repayment Plan

The Extended Repayment Plan allows borrowers with more than $30,000 in debt to extend the repayment period from ten years to up to twenty-five years. Payments under the Extended Repayment Plan can be either standard or graduated. This plan is best for borrowers whose loan burden is too large to bear the standard monthly payments over the course of just ten years.

Income-Based Repayment Plan

The Income-Based Repayment (IBR) Plan allows borrowers with a demonstrated financial hardship to limit their monthly loan payments to 15 percent of their discretionary income (that is, the difference between their adjusted gross income and 150 percent of the poverty guideline for their individual situation). Under this plan, if the balance of the loan has not yet been paid off after 25 years of payments, it can be forgiven. Under IBR, borrowers will pay more in interest over the life of the loan. This plan is best for borrowers who are struggling to afford their monthly payments under other repayment plans.

Pay As You Earn

The Pay As You Earn Repayment Plan allows new borrowers with a demonstrated financial hardship to limit their monthly loan payments to 10 percent of their discretionary income. Under this plan, if the balance of the loan has not yet been paid off after 20 years of payments, it can be forgiven. However, borrowers will pay more in interest over the life of the loan than under the Standard Repayment Plan. 

Income-Contingent Repayment Plan

Under the Income-Contingent Repayment Plan, a borrower’s monthly payment amount is calculated based on annual income and family size as well as his total loan amount. If a loan balance remains after 25 years of payments, it may be forgiven. Unlike the IBR and Pay As You Earn Repayment Plans, borrowers need not be facing financial hardship to qualify for this plan. However, a borrower will likely pay more in interest than in other repayment plans. This plan is best for borrowers who are not facing demonstrated financial hardship, but whose financial situation is insufficient to bear the monthly payments under other repayment plans.

Remember that these are for federal loans only. If at any point, you need advice or have questions about your federal student loans, don’t hesitate to contact your loan servicer. If you have private loans as well, be sure to check with your lender to see what repayment options they have available.

For more information on student loans and federal financial aid, visit StudentAid.gov.

4 Things You Need to Know About Repaying Your Student Loans


Click here for an alternate version of the video with an accessible player.

When it comes to repaying your federal student loans, there’s a lot to consider. But, by taking the time to understand the details of repayment, you can save yourself time and money. This should help you get started.

When do I begin repaying my federal student loans?

You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. Many federal student loans have a grace period. The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repaying your loan. The grace period gives you time to get financially settled and to select your repayment plan. Note that for most loans, interest will accrue during your grace period.

Your loan servicer or lender will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Whom do I pay?

The U.S. Department of Education uses several loan servicers to handle the billing and other services on federal student loans. Your loan servicer will work with you to choose a repayment plan and will assist you with other tasks related to your federal student loans. It is important to maintain contact with your loan servicer and keep your servicer informed of any changes to your address, e-mail, or phone number.

How much do I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

    • the type of loan you received,
    • how much money you borrowed,
    • the interest rate on your loan, and
    • the repayment plan you choose.

You can use our repayment estimator to estimate your monthly payments under different repayment plans to determine which option is right for you. Just remember, if you would like to switch repayment plans, then you must contact your loan servicer.

What should I do if I’m having trouble making my student loan payments?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. Also, ask your loan servicer about your options for a deferment or forbearance or loan consolidation.

Still have questions?

If you need assistance with your federal student loan, it is best to contact your loan servicer. They can help you choose or change your repayment plan, and learn about other options to make your monthly payments more affordable. If you have any questions, don’t hesitate to contact your loan servicer.

Need Advice About Your Student Loans? Your Loan Servicer Can Help!

pay your loan servicerLet’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.

Your loan servicer can help you:

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.

Answers to Your Questions on Student Loan Interest

A college degree is a vital part of helping students have a successful future and a place in the middle class, and making college affordable is a major priority for the Obama Administration.

Federal Aid LogoAs of July 1, 2013, the interest rate on new subsidized Stafford Loans rose to 6.8% from the previous rate of 3.4%. Our Administration is actively working with Congress to bring rates back down for new loans. In addition, the Administration has advocated that any plan passed by Congress apply to all loans first disbursed after June 30, even loans already disbursed.

If the law is changed, the Department and its servicers will adjust rates for all affected borrowers, including those who had already received their first subsidized loan disbursement, without any further action on the part of the borrower or the school.

We know some borrowers and families may have some questions about what the rate change means and we’ve answered some of the most common questions below. If you do have specific questions about your loan please visit http://studentaid.ed.gov/ or contact 1-800-4-FED-AID for more information.

Q: Should I still apply for federal student aid given the interest rate hike?

A: Students and families who wish to obtain financial aid should complete should complete a 2013-2014 FAFSA if they have not already done so. Schools should continue to award and process Direct Subsidized Loans with estimated disbursement dates. The Administration is working with Congress to bring rates back down for new loans.

Q: What is the current rate of federal subsidized loan?

A: Absent further Congressional action, the interest rate for all Direct Subsidized Loans with a first disbursement date on or after July 1, 2013, is 6.8%. This is the same interest rate that applies to Direct Unsubsidized Loans.

Q: Is the 6.8% rate permanent for the lifetime of my loan?

A: The Obama Administration continues to work with Congress to reach agreement on a plan to reverse the doubling of those interest rates.  Further, the Administration has urged that any plan passed by Congress apply to all loans first disbursed after June 30, even loans already disbursed. If the law is changed, the Department and its servicers will adjust rates for all affected borrowers, including those who had already received their first subsidized loan disbursement, without any further action on the part of the borrower or the school.

What if I already have a loan? Does the interest rate change?

A: No change in interest rates on a loan where the first disbursement was before July 1, 2013

Student Loans 101

Ambiguous Girl_Blue#1010231When it comes to repaying your federal student loans, there’s a lot to consider. But, by taking the time to understand the details of repayment, you can save yourself time and money. This should help you get started.

When do I begin repaying my federal student loans?

You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. Many federal student loans have a grace period. The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repaying your loan. The grace period gives you time to get financially settled and to select your repayment plan. Note that for most loans, interest will accrue during your grace period.

Your loan servicer or lender will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Whom do I pay?

The U.S. Department of Education uses several loan servicers to handle the billing and other services on federal student loans. Your loan servicer will work with you to choose a repayment plan and will assist you with other tasks related to your federal student loans. It is important to maintain contact with your loan servicer and keep your servicer informed of any changes to your address, email, or phone number.

How much do I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

  • the type of loan you received,
  • how much money you borrowed,
  • the interest rate on your loan, and
  • the repayment plan you choose.

You can use our repayment estimator to estimate your monthly payments under different repayment plans to determine which option is right for you. Just remember, if you would like to switch repayment plans, then you must contact your loan servicer.

What should I do if I’m having trouble making my student loan payments?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. Also, ask your loan servicer about your options for a deferment or forbearance or loan consolidation.

Still have questions?

On the last Wednesday of each month at 5 p.m. Eastern time (ET), Federal Student Aid (@FAFSA) hosts #AskFAFSA Office Hours. This live Q&A session on Twitter gives you the opportunity to get your questions answered by the experts. This month, we’ll be focusing on student loan repayment. You can submit your questions and join the conversation using the hashtag #AskFAFSA. On Wednesday, May 29, at 5 p.m. ET, tune in during the live event for answers from our experts.

Keep in mind that your loan servicer is always the best place to go for assistance specific to your situation. If you have any questions, don’t hesitate to contact your loan servicer.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

4 Mistakes I Made with My Student Loans and How You Can Avoid Them

Take out loan graphicIt’s been hard to come to terms with, but I need to face the facts: I’m not in college anymore. In fact, this spring marks two years since I graduated from college and went into repayment on my student loans. I know, not the most exciting thing in the world, but important. So while I don’t claim to be a student loan expert, I have learned a lot of lessons along the way, mostly through trial and error. In hopes that you won’t make the same mistakes I did, here are some things I wish I had known when I was graduating and getting ready to start repaying my student loans:

  1. I should have kept track of what I was borrowing.

Let’s be real. When you take out student loans to help pay for college, it’s easy to forget that that money will eventually have to be paid back … with interest. The money just doesn’t seem real when you’re in college, and I didn’t do a good job of keeping track of what I was borrowing and how it was building up. When it was time to start repaying my loans, I was quite overwhelmed. I had different types of loans and different interest rates. When I did eventually see my loan balance, I was pretty surprised.

You can avoid this problem. Had I known there was a super easy way to keep track of how much you’ve borrowed in federal student loans, I would have been much better off. Just go to nslds.ed.gov, select “Financial Aid Review,” log in, and you can view all of your federal student loans in one place! How did I miss that?

  1. I should have made interest payments while I was still in school.

If you’re anything like me, you probably consumed your fair share of instant noodles while trying to survive on a college student’s budget. Trust me, I get it. But one thing I really regret when it comes to my student loans is not paying interest while I was in school or during my grace period. Like I said, I was far from rich, but when I was in college, I did have a work-study job and waited tables on the side. I probably could have spared a few dollars each month to pay down some student loan interest. Remember, student loans are borrowed money that you have to repay with interest and more importantly, that interest may capitalize, or be added to your total balance. My advice: Even though you don’t have to, do yourself a favor and consider paying at least some of your student loan interest while you’re in school. It will save you money in the long run.

     3. I should have kept my loan servicer in the loop

If you’re getting ready to graduate or have graduated recently and haven’t heard from your loan servicer, make sure you check that your loan servicer has up-to-date contact info for you. When I graduated and moved into my first big-girl apartment, I forgot to change my address with my loan servicer. I found out that all of my student loan correspondence was going to my mom’s address. I hadn’t even thought to update my loan servicer with my new contact information. Don’t make the same mistake I did. Keep your servicer informed of address, email, and phone changes.

  1. I should have figured out what my monthly loan payments were going to be BEFORE I went into repayment.

By the time my grace period was over, I had a decent idea of how much I had borrowed in total, but I had no idea what my monthly payments would be. I thought I was fine. I had started my new job and been paying rent and other bills for about six months. Then my grace period ended, and I got my first bill from my loan servicer. It was definitely an expense I hadn’t fully taken into account.

Don’t make the same mistake. Luckily for you, Federal Student Aid just launched a new repayment estimator that allows you to pull your federal student loan information in order to compare your monthly payments under different repayment options side by side. That way, you know what to expect and can budget accordingly … unlike me.

I’ll be the first to admit that this whole process can be a little overwhelming, especially when you’re new at it. But just remember, your loan servicer is there to help you. If you have questions or need advice, don’t hesitate to contact them.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

5 Things to Consider When Taking Out Student Loans

student loan repaymentFederal student loans can be a great way to help pay for college or career school.  While you shouldn’t be afraid to take out federal student loans, you should be smart about it. Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest.

Here are some tips to help you become a responsible borrower.

  1. Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need. To view all of your federal student loan information in one place, go to nslds.ed.gov, select Financial Aid Review, and log in.
  2. Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can use the U.S. Department of Labor’s Occupational Outlook Handbook to estimate salaries for different careers or use a career search tool to research careers and view the average annual salary for each career.
  3. Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
  4. Make payments on time. You are required to pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.  Find out more about student loan repayment, including when repayment starts, how to make your payment, repayment plan options, and more!
  5. Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.

Remember, federal student loans are an investment in your future so invest wisely.

Tara Young is a communication analyst at the Department of Education’s office of Federal Student Aid

4 Things to Do During Your Student Loan Grace Period

Grace 6 month 9 monthYour student loan grace period is a set amount of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. For most student loans, the grace period is six months but in some instances, a grace period could be longer. The grace period gives you time to get financially settled and to select your repayment plan.*

Here are four things you can do during your grace period to prepare for repayment:

1. Get Organized

Start by tracking down all of your student loans. There is a website that allows you to view all your federal student loans in one place.

You can log into www.nslds.ed.gov using your Federal Student Aid PIN to view your loan balances, information about your loan servicer(s), and more.

Note: Don’t forget to check to see if you have private student loans.

2. Contact Your Loan Servicer

loan servicer is a company that handles the billing and other services on your federal student loan. Your loan servicer can help you choose a repayment plan, understand loan consolidation, and complete other tasks related to your federal student loan, so it is important to maintain contact with your loan servicer. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.

To find out who your loan servicer is, visit nslds.ed.gov. You may have more than one loan servicer, so it is important that you look at each loan individually.

3. Estimate Your Monthly Payments Under Different Repayment Plans

Federal Student Aid recently launched a Repayment Estimator that lets you compare your monthly student loan payment under different repayment plans to help you figure out which repayment plan is right for you.

Just go to www.StudentLoans.gov –> Log in –> Click “Repayment Estimator” in bottom left corner. It will pull in all of your federal student loan information automatically so you can compare repayment plans based on your specific situation.

4. Select The Repayment Plan That Works For You

Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time. Flexible repayment options are one of the greatest benefits of federal student loans. There are options to tie your monthly payments to your income and even ways you can have your loans forgiven if you are a teacher or employed in certain public service jobs. Once you have determined which repayment plan is right for you, you must contact your loan servicer to officially select a new repayment plan.

* Not all federal student loans have a grace period. Note that for many loans, interest will accrue during your grace period.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

Class of 2013: What’s Next for Your Student Loans?

choose a repayment plan imageI’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!

For additional information and tips, visit Federal Student Aid on Twitter , Facebook, and YouTube.

Kelsey Donohue is a senior at Marist College (N.Y.), and an intern in ED’s Office of Communications and Outreach

New Student Loan Repayment Option to Help Recent Graduates

Graduation CapsFor many recent college graduates, monthly student loan payments can be overwhelming. The good news is that a measure of relief is on the way for more than a million borrowers. The Obama Administration recently announced changes that will allow many borrowers to take advantage of a new repayment plan that could  lower their monthly federal student loan bills.

The plan, known as Pay As You Earn, caps monthly payments for many recent graduates at an amount that is affordable based on their income. That helps borrowers to stay on track to repay their loan and avoid default.

The Pay As You Earn plan, which President Obama first announced in October 2011, caps payments for Federal Direct Student Loans at 10 percent of discretionary income for eligible borrowers.

As many as 1.6 million Direct Loan borrowers could reduce their monthly payments under the new Pay as You Earn plan. The new option complements additional repayment plans offered by ED to help borrowers manage their debt, including Income-Based Repayment, which caps monthly loan payments at 15 percent of a borrower’s discretionary income. Borrowers who are not eligible for Pay As You Earn may still qualify for Income-Based Repayment, which more than 1.3 million borrowers already use.

To learn more about Pay As You Earn, and to see if it’s right for you and if you qualify, please visit studentaid.gov/payasyouearn.