student loan repayment manual table of contents - Tufts University

Planning a Student Loan Repayment Strategy38With all the options available to them, it is understandable how borrowers can be challenged in setting up aplan to effectively manage their student loan debt. The good news is that you have a lot of optionsavailable to you, but the bad news is that you need to take the time to figure it out. It is important for youroverall financial health to have a plan of action to manage your student loan debt. Realize that, as timegoes on, you may need to modify your plan to incorporate life changes.The Financial Aid Office can provide some guidance but we can’t tell you what to do. Each borrower hasindividual financial circumstances and only you know what those are. The most that we’re able to provideis some “food for thought”. The following provides some points for consideration when determining a planthat best suits your needs in light of your career path and goals:‣ Know who your creditors are and introduce yourself to them. Using the information the FinancialAid Office provided you during your exit session and NSLDS, you can easily obtain a complete list ofyour creditors/loan servicers and their contact information. Once you have this information, call yourstudent loan servicers to ensure they have your correct graduation date, verify the loans (type, principalamount, interest outstanding) they’re servicing for you and obtain information as to how you can accessthis information online. You should also verify when your grace period ends, when your first paymentbegins and your repayment options available‣ Borrower benefits that are provided on your loans can result in savings for you. Borrowers thathad borrowed FFELP Stafford and Grad PLUS prior to 7/1/2009 most likely have borrower benefitsattached to those loans. You should know what those benefits are and what criteria you need to meet inorder to obtain them and, before choosing to consolidate, decide whether or not these borrower benefitsare attainable for you. You also need to decide what is most important to you when managing yourstudent loan debt. Perhaps you’d be willing for forfeit whatever borrower benefits are afforded to youas long as you work with as few loan servicers as possible. If that’s true, maybe Federal LoanConsolidation is right for you.‣ Get to know your loans by placing your loans in a hierarchy of most favorable to least favorable.By figuring out which loans you have are the least favorable and the most favorable in terms of theiroverall cost to you, it will help you set your goals for making overpayments on unfavorable loans whileon more favorable loans you make the minimum payments. Variable rate loans such as most privateeducation loans are considered your least favorable loans because they don’t have an interest rate capand their rates change very frequently. The variable rate loans with an interest rate cap are better thanprivate education loans with no cap. Do whatever you can to pay private education loans and/or higherrate loans off sooner rather than later. Fixed rate loans are more favorable than variable rate loans andthose fixed rate loans that were interest-free while you were enrolled in school are also good.‣ Estimate a realistic timeframe in which you can repay your student loans. This is hard to do andrealize that you might have student loan debt equal to most home mortgages which can range from 15-30 years (and you still will have monthly rent or mortgage to pay AFTER you’ve made your studentloan payments). Consider any financial help you might receive from your family. If you are part of atwo-income household or reduce your living costs to the extent possible, you may be able to repay yourloans sooner. You should have a realistic goal as to when you’d like to be done paying off your studentloans with the emphasis on sooner rather than later.‣ Begin devising a household budget. You need to decide what you can or cannot afford in terms ofliving standards and in student loan payments. Be brutally honest with yourself when deciding if an