This is a guest post by Jo Barnard.
You have earned your credits, received your degree and are ready to say goodbye to your college lifestyle. What happens next? If you borrowed to pay for your college education, the time has come to start repaying your student loans. Whether you borrowed for your education with federal direct loans, private school loans or both, you may have different options post graduation.
Determining what your payments will look like
A student loan repayment calculator, which you may have used when you were determining how much you had to borrow for college, can also help you to figure out what your payments will look like once you graduate. Most calculators only provide data for one year at a time, so if you’re trying to determine the total amount you will owe, be sure to enter each year separately and add them together to get a sense of your total monthly payment after college.
Since there are a variety of plans for repaying school loans, it is also a good idea to sit down with your lender to get a detailed view of your options. Federal college loan repayment options include standard repayment, income-based repayment, extended repayment plans and graduated payment options. Take the time to work with your private lender to determine a repayment plan that most comfortably fits your expected income. This could mean deferring payments for a little, combining loans for a better rate, or adjusting the payment amount and length of term.
Explore grace periods
When you finance your college education with federal loans, there is typically a grace period before payment is expected after graduation. You have nine months before you have to start paying on Perkins Loans and six months before you have to begin paying back any Stafford Loans. Additionally, you may be able to take advantage of a grace period with some private student loans. Make sure you are familiar with repayment expectations so you don’t miss a payment.
The most important thing you can do is make sure you are able to make the payment you commit to every month. Failing to do so will put you in default and negatively affect your credit – not the foot you want to start out on.
Know your college loan options in the event of hard financial times
In the event that you absolutely cannot begin to make payments at the time they are due, you may still have options to avoid default and repay your school loans. In order to prevent defaulting on your loan, contact your lender to determine if payment deferment or forbearance could help you. Both options push back the start of repayment. If you qualify for deferment, interest will not be charged on your loan while you are not making payments. If your loan enters forbearance, you will be able to delay payments for a period of time, but interest does accumulate, and you will have to repay it.
Knowing your options will make repaying your school loans easier
Once you know your options, making smart choices for repaying your student loans is easier. Remember, the first step should be taking the time to meet with your lender to look at your loan information specifically. Be honest with yourself and your lender about what you will be able to handle financially and you may be able to create a plan that works for you.
Sponsored content was created and provided by RBS Citizens Financial Group.
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