student loan finance corporation

hello, and welcome to your money 2.0. i’mtiffany santilli, western new england college student and social media intern at cambridgecredit counseling. in my previous “life after graduation” episode i discussed thevarious expenses college students face post-graduation. one of the largest expenses graduates mustcontend with is student loans. thankfully, there are several loan repayment options availableto help make things a little easier on us. according to the ny times, the cost of highereducation has increased a staggering 439% since the 1980’s, nearly doubling the averagestudent loan debt carried by grads to $24,000. these statistics give light to the fact thatthat most college students will have a significant amount of loans to satisfy after graduation.with the current job market and economic conditions,

students with loans, including myself, mayface feelings of anxiety and stress while trying to figure out how to pay off the significantdebt we owe. when starting your post-graduate life, it’simportant to understand the financial impact of your choices. high levels of debt haveforced many to default on their loan payments, currently 7% of loan recipients, and thatcan spell disaster for your overall financial profile. in order to prevent defaulting onyour loan it is important to take student loan payments seriously. understanding thedifferent options for repayment plans is one way to help get a handle on your loan debtbefore the payments start. upon graduating, you’ll enter a six-month grace period beforeyour student loan payments are due. of course

you can make payments during that time frame.before any payments are made, it’s important to research the different types of plans offeredthrough your loan provider to determine which will suit your needs best. two helpful onlineresources explaining the different plans available are www.direct.ed.gov and www.finaid.org. there are several repayment plan options tochoose from; however, we will focus on the four most popular plans. the standard repaymentplan consists of a fixed monthly payment for the duration of the plan – 10 years. thisis a smart option if you can handle higher monthly payments as you’ll pay down yourdebt more quickly and pay the least amount of interest. similar to the standard plan,the extended plan consists of fixed monthly

payments but lengthens the repayment termto 25 years. in order to be eligible for the extended plan you must have more than $30,000in student loan debt. this plan may be right for you if you need to make smaller payments;however, you will pay much more in interest over the life of the loan. if you expect yourhousehold income to increase steadily over time, a graduated repayment plan might bethe best option. in this plan, monthly payments start out low and increase every two years.the length of this plan is also 10 years. if these plans seem too burdensome for yoursituation, an income based repayment plan may be the solution. income based repaymentcaps your monthly payment at an amount intended to be affordable based on your income, householdsize, state of residence, and current balance

of your student loans. in order to qualifyfor this type of plan you must provide accurate documentation that your loan debt is highrelative to the factors stated above, also known as your partial financial hardship.this plan may seem like a great solution to pay less on your loans however there is adrawback. with an income based repayment the loan debt will accrue more interest and inthe long run and you may end up paying much more interest than the original loan amountborrowed. as you can see there are many possibilitieswhen it comes to paying off your student loan debt. being knowledgeable about these optionsbefore your loan payments begin will help you in successfully planning a way to manageyour obligation. well, that’s it for this

edition. as always, we welcome your feedbackand ask for your thoughts and suggestions by e-mailing us at yourmoney2@cambridgecredit.org.thank you for watching. until next time, i’m tiffany santilli for cambridge credit counseling.