Saturday, December 27, 2014

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Time For Recent Grads To Start Paying Loans

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TWC News: Time For Recent Grads To Start Paying Loans
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For those who graduated earlier this year, it's time to start paying those student loans. For information on where to go and what to do, NY1’s Tara Lynn Wagner filed the following Money Matters report.

Hey there Class of 2013, you know that money you borrowed, on average $30,000 a piece. Well it's time to start paying it back. November marks the end of your six month grace period and your first payment is now officially due.

Let's look at federal loans. If you don't already know who you'll be paying and how much, you should start by visiting

“Which is a student loan database system and they can enter their information and they can pull a full history of their loans and then find the contact information for their particular loan servicer,” said Michael Turner of the New York State Higher Education Services Corp.

Turner suggests recent grads set up an online account with your loan servicer and choose your repayment plan. The standard plan splits your burden into 120 even payments over 10 years, but if that monthly payment is out of your reach, he suggests you look at an Income Based Repayment plan, even if you are currently unemployed.

“So if you have zero income, you would literally have a zero-a-month payment,” he said.

The more you make, the more you'll pay, although you'll never pay more than the standard payment would have been. Your payments will also extend past the standard 10 year mark, meaning more interest, but they won't go on forever.

“If you make 25 years worth of payments on the income based payment plan, eventually they'll forgive the debt that's outstanding, even if those first few years were zero payment because you weren't working,” Turner said.

Another option, Pay as You Earn, is available for certain types of loans. The payments here are smaller, 10 percent of your discretionary income, rather than 15 percent and forgiveness comes after 20 years. A list of repayment options and calculators can be found at

Regardless of the plan you choose, the important thing is to make your payments on time. You're best bet, set your account to auto pay.

“They set a date, the money comes out of their bank account and all they have to make sure is the money is there and the loans will be paid,” Turner said.

A report card full of on time payments will help keep your credit score way above your GPA. ClientIP:, UserAgent: CCBot/2.0 ( Profile: TWCSAMLSP