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I'm Graduating... What's Next?
First of all, congratulations Graduate! Now, as you leave school, your life will take on new directions in the form of opportunities, challenges, and responsibilities. One very important responsibility you will face is the task of repaying your student loan.
Step 1: Complete Exit Counseling!
Exit Loan Counseling will assist you in understanding your repayment rights and responsibilities, options for repayment, and debt management skills.
To complete Exit Loan Counseling visit www.nslds.ed.gov. As a previous student loan recipient, you are required by the Federal Department of Education to complete Exit Loan Counseling. You will need your Federal PIN to complete Exit Counseling. If you do not remember your Federal PIN, please visit www.pin.ed.gov to request a duplicate.
Once you have completed this Federal requirement, print out a copy of your confirmation page to keep in your personal financial aid file. We will place a hold on the transcripts of
all students who have not completed Exit Loan Counseling.
Step 2: Manage Your Money
To successfully repay your student loan, you must take control of your finances. The results will bring you peace of mind and help ensure your financial freedom in the future. More information about managing your money is available on Adventures in Education at www.AIE.org.
To begin, get organized. Assemble all of your loan and other financial documents in one place. Review all the documents to make sure you understand your financial obligations. Then, develop a budget. To assist you, please utilize the Budget Worksheet . After you have completed the worksheet, it is important to estimate your loan payments. Your lender will send you information about your student loan payments before you begin repayment. An online payment calculator is available on Adventures in Education (www.AIE.org) in the "College Student" section. The Office of Financial Aid can provide you with the amount of your loan indebtedness or you may visit the National Student Loan Data System at www.nslds.ed.gov.
Step 3: Repaying Your Student Loan
When you first borrowed your federal Direct loan, you signed or e-signed a legal document—the Master Promissory Note (MPN)—which established your obligation to repay that loan and, in certain cases, future loans. You may have signed or e-signed only one MPN for all of the loans you borrowed. Repayment guidelines for your MPN include:
- Your payments are expected on a monthly basis.
- Unless your lender agrees otherwise, the minimum monthly payment will be $50.
- Your minimum annual payment will not be less than the amount of interest due and payable.
- The maximum repayment period is usually 10 years.
- You may prepay on your loan at any time without penalty. This will reduce the total amount of interest you pay on your loan.
- Your lender will give you the opportunity to choose a standard, graduated, income-sensitive plan, or, if you are eligible, an extended repayment plan.
- You have the opportunity to make adjustments to your repayment plan at least once a year.
Grace Period: Federal Direct loans have a grace period. Your grace period is a transition period that allows you to prepare for the repayment of your loan. As a Federal Direct loan borrower, your grace period begins when you drop below half-time enrollment at your school and is usually six months. If you have a subsidized loan, interest will not accrue during your grace period, but if you have an unsubsidized loan, interest will continue to accrue during your grace period.
Deferment or Forbearance: If repayment becomes difficult, a deferment or forbearance allows you to temporarily suspend loan payments or make smaller payments. To find out if you qualify for this option, contact your lender for assistance.
Consolidation: Loan consolidation helps some borrowers meet their responsibilities by lowering the amount of their monthly payments while extending the time of repayment. However, not all borrowers are eligible for consolidation, and some borrowers do not benefit from consolidation. To find out if you qualify for consolidation, contact your lender for assistance of visit Texas Guarantee's Consolidation Station at www.ConsolidationStation.org.
Step 4: Avoiding Default
Given the number of repayment options available to you, you should be able to maintain a good repayment record and avoid default. Of course, during repayment of your loan, circumstances can occur that may make it difficult for you to make your payments.
If you miss a payment, you should contact your lender immediately to explore any possible solutions to your situation. Otherwise, consequences of default may include:
- It will be reported on your credit score.
- You can be sued for the entire amount of the loan.
- Your federal and state income tax refunds can be withheld.
- Other state and federal payments can be withheld.
- If you are employed, your wages may be subject to "administrative garnishment."
- Until satisfactory arrangements have been made to repay the defaulted loan, you will be ineligible for additional federal financial aid.
- You may be ineligible for assistance under most federal benefit programs.
- You will be ineligible for deferments.
- You will be liable for the costs associated with the collection of your loan.
- The renewal of any professional or occupational license you hold may be denied.
- You still owe your loan.
All of this can be avoided if you remember these five simple steps for preventing defaults:
- Understand your obligations and options.
- Develop a sound, realistic financial plan and follow it.
- Stay in contact with your lender or servicer.
- Make your payments on time, or make special arrangements.
- Keep copies of all correspondence, cancelled checks, and any forms you sign.
If you experience difficulties repaying your student loan, contact TG Default Prevention at 800.530.0140, or send an e-mail message to email@example.com.