4 Steps To Help Manage Student Loan Repayment
The pressure of student loan debt can be stressful for African American students, who are more likely to borrow larger amounts of money than their white counterparts to support the cost of college. Despite the challenge of managing student loan debt, a college education is undoubtedly worth the investment and there is hope for graduates who need to manage it. To support the efforts of African American students and families interested in postsecondary credentials, certificates and degrees of value, the White House Initiative on Educational Excellence for African Americans (Initiative) has released a fact sheet that explores the black-white student debt gap and highlights federal resources students and families can use to support the cost of college, as well as navigate options for student loan repayment.
The Student Loan Debt Gap
According to a new Brookings Institution study, on average, black graduates owe about $7,400 more than their white peers upon graduating with a bachelor’s degree—and that figure only paints part of the picture. The report also found that the black-white student loan debt gap more than triples in the four years after graduation. Four years after graduation, black graduates owe an average of $25,000 more than their white counterparts. Factors contributing to the $25,000 student debt gap include differences in repayment patterns, the black-white wage gap and other employment related disparities.
Below are four steps every student should take to effectively manage student loan debt.
The U.S. Department of Education’s College Scorecard is an interactive college comparison tool that provides reliable data to help your college search. Using the College Scorecard, you can access information on college costs, average amounts borrowed, loan default rates and employment post-graduation. This information should be used to help you determine which institutions may be a good fit. Financial burden should not be used to deter you from applying to an institution and for financial aid.
Complete the Application for Student Aid (FAFSA) and compare financial aid packages during senior year of high school. Submit the FAFSA (free and available now) senior year to ensure you are matched with a financial aid package. To get an estimate of your federal aid before completing the FAFSA, use FAFSA4caster, a free calculator that gives an early estimate of your eligibility.
Once you receive your financial aid packages from schools, compare them by finding the net cost of attendance for each school. The net cost is the amount that students and families must pay out-of-pocket with money earned from work or student loans. It can be found by subtracting grants and scholarships offered in the package from the total cost of attendance. The U.S. Department of Education’s Financial Aid Shopping Sheet is designed for use by institutions but is a useful layout for comparing financial aid packages.
Avoid sticker shock when repayment begins by monitoring your student loan balance throughout college. Become familiar with the types of federal loans you have, your balance, interest rates, and student loan servicer by visiting the National Student Loan Data System. You will need to use the FSA ID from your FAFSA submissions to access your information. If you have non-government or private loans, they are not listed on NSLDS. Information on non-federal student loans can be accessed through a copy of your credit report. Federal Student Aid offers the Consumer Financial Protections Bureau as a resource for assistance with non-federal loans.
Explore repayment options as graduation approaches. Create your repayment plan with an understanding of all options that are available. Familiarize yourself with the repayment terms of your loans to see if you qualify for savings on interest, options to pay more than your required monthly payment, or loan forgiveness, cancellation, or discharge. Federal Student Aid offers several tools and resources to help you determine which repayment plan will work best for you, like the Repayment Estimator, which can show what your monthly payment would be under different plans. Income-driven repayment plans are an option that can adjust with your income, and can significantly lower monthly payments.
Other repayment options may even help you decide on a career path. For example, the Public Service Loan Forgiveness program forgives any remaining federal Direct Loan debt after the borrower works full-time in public service and makes monthly payments for 10 years. A similar program is available for teachers. The federal student aid website offers a breakdown of these programs, as well as other loan forgiveness, cancellation, or discharge options.
David J. Johns is the executive director of the White House Initiative on Educational Excellence for African Americans. He is an international public speaker, domestic policy advisor, community builder and strategist.
Darnisha Johnson is a Congressional Black Caucus Foundation intern at the White House Initiative on Educational Excellence for African Americans. She is a first-generation college student and a communications major at Bowie State University.