Just Graduated College? The First 3 Things to Know About Student Loan Debt

Student loan debt for many recent college graduates is becoming the norm. Student loan debt is now more than $1 trillion and continues to rise. For many younger Americans, it has become the largest household debt.

A study by CampusBooks.com, a textbook price comparison website, found that 56% of students at four-year institutions carry some form of student debt, and that eight in 10 college students are concerned about repaying their student loans. In addition to the financial stress those loans bring and the stresses that come with keeping their grades up, the report found that 66% of students work either full or part-time during school.

Also concerning, nearly half (49%) of all black student borrowers default on their student loans 12 years after entering college. This is true even of students who earned a bachelor’s degree and includes 75% of borrowers who dropped out of for-profit colleges.

Although the statistics are grim, you don’t have to become a statistic. Being informed and proactive can help you manage your loans and begin creating wealth for life as you embark on your career journey.

The Department of Education offers forgiveness programs to help borrowers with student loan debt. These programs include the Public Service Loan Forgiveness (PSLF) program and the Teacher Loan Forgiveness (TLF) program. Both programs are designed to alleviate the student loan burden.

The PSLF program is available to borrowers who work full time in public service jobs. Federal, state and local government jobs qualify (including certain nonprofit employers), as do jobs with tax-exempt nonprofits. Borrowers are required to make 120 qualified payments before they are eligible for forgiveness of the remaining loan balance. The TLF program is available to teachers who teach full time for five complete and consecutive years at certain elementary and secondary schools, and other qualified educational institutions that serve low-income individuals. To find out if the school at which you teach qualifies, visit the Teacher Cancellation Low-Income Directory. 

After graduating, get an understanding of your student loan providers. If you are not exactly sure who holds your student loans, visit the US Department of Education’s website. This will guide you in determining the next steps to better manage your student loans.  In addition, also consider Sallie Mae’s Manage Your Loan portal. This provides borrowers with various tools to manage payments, apply for deferments, and additional tools to get a handle on your loans.

Generally, borrowers are not responsible for payments until six months subsequent to graduation. If at that time, you find that you are having difficulties making payments, contact your loan provider as soon as possible.  Borrowers may be able to request a deferment or forbearance, which allows users to postpone payments until a later date. Keep in mind that the main difference between a deferment and forbearance is that you may not be responsible for making interest payments with a deferment (there are some exceptions). Either way, it is a good idea to keep your provider in the loop.  Doing so can protect your credit and provide you with payment options to tackle your student loan debt.

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