Payback can be a pain

Graduating from college opens up a flood of opportunities for students. Whether a student decides to move on to a graduate school, enter the workforce or simply settle down with a family, graduation brings an undeniable air of uncertainty, especially when it comes to financial matters.

Students who rely on federal student loans are considerably prone to financial confusion in the future. Statistics in general show that the average undergraduate student accumulates approximately $20,000 over the course of a college career. After graduation, a student is faced with a multitude of decisions regarding these borrowed funds.

For Sam Houston State University, when a student files for graduation, he or she must complete an online exit-counseling session to go over debts owed prior to leaving. Then, taking several factors into account, students begin making payments generally six months after the he or she ceases enrollment at a university.

Despite the mandatory exit-counseling session, there are still some students who are clueless to the student loan payment process. Some fail to acknowledge they will actually have to pay interest on some of their accrued loans. Depending on the interest rate, which can be anywhere from four percent to 8.25 percent, the amount of money owed to the lender can be an additional $10,000 for a $20,000 debt.

The Texas Guaranteed Student Loan Corporation offers several helpful options to students struggling to pay off student loans. Deferment allows students to defer student loan payments because of unemployment, economic hardship and student enrollment, depending on the requirements of the lender.

“If you are not in the position to pay your student loan payments, I would look into some sort of employment deferment,” said Angie McCullough, recent Sam Houston State University graduate that had to choose this alternative. “If you are in the position to pay, pay as much as you can.”

Forbearance is an option that allows a borrower to acquire permission for reduced payments from the lender. Special circumstances, such as medical or financial problems, can lead to forbearance.

Consolidation allows a student to reduce the amount of monthly payments by centralizing all student loan payments under one lender. Consolidation may, however, forfeit the student’s right to deferment. Lenders also provide special payment plans for borrowers, such as graduated repayment, income-sensitive repayment and extended re-payment. Teacher loan forgiveness may also be an option for some students.

Delinquency is a term used when a student loan payment is late, even by just one day. Delinquency can cause late fees, depending on the terms of the loan, and the loss of a student’s ability to borrow money in the future. Being in default means a student failed to make scheduled payments over an extended period of time and is in violation of the loan agreement. Default can lead to a bad mark on a person’s credit history, as well as ruin chances to borrow money in the future.

According to the TGSLC and Sam Houston State University financial counselors, staying in contact with the appropriate lender and avoiding default are some of the best ways of responsibly handling student loan payments. Terri Colley, a graduate counselor at the Office of Student Financial Aid, agrees that students should refrain from making late payments and getting into default.

“A student should always be aware of how much they owe and frequently stay in contact with his or her lender,” she said.

Students have plenty to look forward to when they graduate. Failing to make student loan payments and diving into a financial nightmare should not have to be one of those things. With the right tools and resources, students should have no problems making their student loan payments and avoiding mistakes that could affect the rest of their lives.

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