The parties are over, Thirsty Thursdays are a mere memory, and early morning wake-up calls have taken the place of 11:30 am classes. Life after college can be a bit jolting and the wretched specter of student loans don’t help to ease the transition, especially as a volatile economy has made the job search even more difficult for many recent graduates.
The realities of repaying student loans hit me harder than Mike Tyson after a deadbeat roommate forced me to cough up rent for a two bedroom apartment by my lonesome for a number of months. Needless to say, paying back my loans fell somewhere toward the bottom of my priority list. A reluctance to repay student loans was mirrored by some of my college compadres. While I chose to defer—or suspend—my loans for a year, some friends used the “out of sight, out of mind” method.
Not surprisingly, our fiscal dilemmas are shared among students. Default rates for federally guaranteed student loans are expected to reach 6.9% for fiscal year 2007, up from 4.6% two years earlier, according the U.S. Department of Education. And over the past decade, the amount of debt students graduated with more than doubled from $9,250 to $19,200 for graduates, according to the Project on Student Debt, a student advocacy organization.
For graduates facing the daunting realities of coughing up that borrowed dough, check your options:
Call your lender. Many of us like to treat overdue bills like a bad rash—ignore it and it’ll go away—but much to our dismay, bills, especially student loans, don’t work that way. Contact your lender as soon as you get a whiff of repayment difficulty, says Mark Kantrowitz, publisher of FinAid.org, an online financial aid resource center. “You don’t want to default and then call, because you’ll lose some of your [repayment] options,” he adds. Remember, lenders can garnish wages, social security, and income tax refunds if you fail to repay your loans.