Recent college graduates are reminded that the grace period for federal student loans is ending and repayment will begin in November. New York State Higher Education Services Corporation (HESC), the State agency that helps people pay for college, reminds borrowers that they have several options available that can help keep payments manageable. HESC offers these tips to help borrowers manage their student loan payments:

Keep Track of Your Loans Know who holds your federal loans and how much you owe. The National Student Loan Data System (NSLDS) provides a full history of your federal student loans, including your loan balances, names and addresses of your loan holders and colleges attended. Use HESC’s loan tracker to help keep an accurate record of both your federal and private loans, and keep copies of your master promissory notes (MPN) and other important paperwork together.

2. Choose a Repayment Plan Select a repayment plan that’s right for your financial situation. You'll have from 10 to 25 years to repay your loan, depending on the repayment plan you choose. Generally speaking, the longer the loan term, the more interest you will pay. Use the repayment comparison calculator at Federal Student Aid to evaluate which of these plans may offer the best option for you:

• Standard Repayment A fixed payment amount each month of at least $50, or more if necessary to meet the 10 year repayment requirement. This plan minimizes the total amount of interest you will have to pay over the life of the loan.
• Extended Repayment Available to borrowers who owe more than $30,000 in federal student loan debt, extended repayment allows for a maximum repayment period of 25 years. Payment amounts can be fixed or graduated.
• Graduated Repayment Payments start out low and increase every two years, with full payment required within 10 years. Your minimum monthly payment must cover the amount of interest that accrues between payments. If you expect your income to increase steadily over time, this plan may be right for you.

Borrowers who are experiencing financial hardships may be able to choose options that can reduce their monthly payment even further:

• Income-Based Repayment (IBR) Available for Stafford, Grad PLUS and Consolidation loans; IBR is not available for loans that are currently in default, Parent PLUS Loans, or Consolidation loans that were used to pay off a Parent PLUS Loan. The required monthly payment is capped at an amount that is intended to be affordable based on your income and family size. If you make on-time payments under the IBR plan for 25 years and meet other requirements, you may be able to have the remaining balance of your loan(s) cancelled. Use the interactive IBR calculator to see if you are eligible for IBR and what your estimated monthly payment may be.
• Income-Sensitive Repayment Available only for Federal Family Education Loans (FFEL) loans, the Income-Sensitive Repayment Plan is based on your annual income at the time you begin repayment and must be repaid within ten years. As your income increases or decreases, so do your payments.
• Pay As You Earn Only loans made under the Direct Loan Program - Direct Subsidized, Direct Unsubsidized and Direct PLUS loans for graduate or professional students are eligible for repayment under Pay As You Earn. You must be a new borrower. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1 2007. In addition, you must have received a disbursement of a Direct Loan on or after Oct. 1 2011. The Pay As You Earn plan generally has the lowest monthly payment and eligible borrowers have up to 20 years to repay. If you repay under Pay As You Earn and meet certain other requirements, any remaining balance will be forgiven after 20 years of qualifying repayment.

Contact your loan servicer for additional information about repayment plans and options for reducing your monthly payment.

3. Start Repayment An Electronic Debit Account (EDA) allows online payments or automatic deductions from your checking account and may offer an interest discount. Not only will you save time, but you won’t have to remember to write a check every month. Check with your servicer for details.

4. Create and stick to a budget Creating a budget will help you live within your income and manage your payments. Meet your “needs” first, then your “wants” as you can afford. Revisit your budget regularly to make adjustments as necessary. Get started by using HESC’s budget worksheet to help.

5. Keep in Touch Remember to notify your servicer in writing if you change your name, address or phone number. Keep copies of all correspondence in your financial aid file, which should include all paperwork relating to your loan.

 What if You Can’t Pay? Help is available if you are unemployed or have other extenuating circumstances that make it difficult for you to repay your student loan. Ignoring your student loans will create a more serious situation later. Don’t let payment problems get out-of-hand…work with your servicer at the first sign of difficulty. You may be eligible for a deferment, which delays payment, or a forbearance, which may temporarily suspend or reduce your payment.  Or you may qualify for an income based repayment plan, which may lower your monthly payment significantly.

 Managing your student loan intelligently is an important step in meeting your student loan obligations, establishing a good credit history and safeguarding your financial future.

About HESC: HESC is New York State’s student financial aid agency that helps people pay for college and a national leader in providing need-based grant and scholarship award money to college-going students. At HESC’s core are programs like the Tuition Assistance Program (TAP), numerous state scholarships, federal college access grants and a highly successful College Savings program. HESC puts college within the reach of hundreds of thousands of New Yorkers each year through programs like these and through the guidance it provides to students, families and counselors. In 2012-13, HESC helped more than 342,000 students achieve their college dreams by providing more than $979.4 million in grants, scholarships and loan forgiveness benefits, including $931 million awarded through the Tuition Assistance Program (TAP).

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