Chances are if you have any type of students loans you are in it for the long haul. The good news is, you can do it. Student loans were designed with flexibility in mind. There is a way for you to repay your loans, and it doesn’t have to be painful.
Whenever the Office of Financial Aid asked you to sign something, it was for a reason. Most often documents you signed relating to your loans were Promissory Notes. You should have kept copies of these notes in a file. These are the best places to start. Included with your Promissory Note is a copy of borrowers’ rights and repayment responsibilities of every loan you have ever taken while a student at St. Olaf. Start by reading these! They should also help you make a tally of every dollar that you owe. It is important to establish how much you owe early on. Learn more about the terms of your loans on the loan repayment section of our website.
The chart below should give you an idea of the starting salary you will need to repay various levels of student loan debt. The chart assumes a fixed 6.8% interest rate and a ten year Standard Repayment Plan. It also assumes that you will be using 10% of your income for student loan repayment.
|Amount Borrowed||Monthly Payment||Estimated Income|
Important Repayment Terms
Deferment: A deferment allows you to defer or postpone your scheduled monthly loan payments. Deferments may apply to PLUS loans, Federal Consolidation Loans, and Federal Family Education loans, including the Federal Stafford Loan.
Deferments last for different amounts of time. If you have already received a prior deferment, you may qualify for the same one again. In some cases, if you have exceeded the time limit on a particular deferment, you may no longer be eligible to apply for the same deferment.
During the deferment period, the federal government will pay the interest on subsidized loans. If you have an unsubsidized loan, you can save money by paying the interest at regular intervals; otherwise, the interest will be added to the loan principal.
Forbearance: If a borrower does not qualify for a deferment, they may request a forbearance. A forbearance allows the temporary reduction or postponement of the principal payments for periods of up to one year at a time. Receiving a forbearance is are not automatic, however. You must apply for a forbearance in writing through St. Olaf or the agency that St. Olaf employs to service your loan. You must supply documentation to support your request for a forbearance. You will also have to continue your payments until you are notified that your forbearance has been granted.
*IN CASES WHERE A FORBEARANCE AGREEMENT IS REQUIRED, the borrower and lender must agree to the way in which the interest accruing during the forbearance will be paid.
Cancellation: Loans will be canceled in the event of the borrower’s death or if the borrower becomes totally and permanently disabled after the loan is distributed. In addition, the following types of loans may qualify for loan cancellation:
There are four basic rules to successfully repaying your student loans. While all cases are different, following these steps can ease the responsibility of repaying student loans.
Establish a Budget
The most effective way to ensure you are going to have enough cash to cover all your bills is to establish a monthly budget. The easiest way to determine what you are going to be able to spend each month is a budget calculator. (There are numerous free budget calculators on the web.) The first step towards developing an accurate budget is determining your take home pay after taxes. With this number established, use the calculator to subtract your expenditures such as housing, utilities, car bills, gas, medical expenses, groceries, credit card and other bills, student loans, entertainment and miscellaneous expenses. With this completed, you have a monthly budget to follow.
Know Your Rights and Responsibilities
You are responsible for:
- Repaying the loan as agreed (including any accrued interest, and the guarantee and origination fees deducted from the loan at disbursement) even if you do not complete your education, are unable to find employment, or are dissatisfied with the education you received.
- Repaying the loan even if a bill is not sent; failure to receive a bill or coupon booklet does not relieve you of the obligation to repay your loans on schedule.
- Completing entrance counseling prior to receiving the first disbursement and exit counseling prior to leaving school.
Keep in Contact with Your Lender or Servicer
- You are responsible for notifying your lender immediately in the event of:a change in name, address, phone number, or social security number, a drop below half-time student status, graduation, withdrawal, or transfer to another school, inability to meet the repayment terms agreed upon and the need to apply for a deferment or forbearance
Know Your Repayment Schedule
Remember it is your responsibility to make your payments on time, even if your servicer does not send you a coupon book or bill! If you do not follow your payment schedule, you could be considered in default.