In 2012, 7 of 10 graduating college seniors had student loan debt, $29,400 on average according to the Project on Student Debt. Student loans are one of the biggest obstacles to financial success for families. The information below can help you understand your student loans and manage them effectively.

What types of loans do I have?

Student loans fall into two main categories, federal loans insured by the U.S. Department of Education (ED) and owned by your school, a bank, or the ED and private loans originated by a bank, state agency, or school. Using the National Student Loan Data System (NSLDS) at www.nslds.ed.gov you can get a list of your federal student loans. Just remember that any private student loans will not be listed.

When do payments begin?

Generally, payments begin six months after you graduate, leave school, or drop below half-time enrollment. Before leaving school, contact your servicer to verify when your repayment begins. Don’t know who your servicer is? You can find that information at www.nslds.ed.gov.

How much will I have to pay?

You payment will depend on several factors, including your balance, interest rate, and the repayment plan you choose. Below is a listing of some repayment options that might be available to you:

• Standard – fixed, 10-year repayment period with a minimum payment of $50 per month.
• Graduated – payments start low and increase every two years during the 10-year repayment period.
• Extended – for some borrowers with more than $30,000 the repayment period can be extended to 25 years with fixed or graduated payments.

What if I can’t make my payments?

Contact your servicer or a certified credit counselor immediately to discuss your options. You may qualify for a deferment or forbearance to temporarily postpone or reduce your payments. You can also change repayment programs to possibly lower your payment. Some income-driven repayment plans include income-based, pay-as-you-earn, income-contingent, and income-sensitive. Your servicer can let you know which options are available to you. Just keep in mind that the longer it takes to pay your loans, the more you will pay for interest charges. The goal should be to eliminate them, not delay them.

Choosing the best student loan management option for your family will help you achieve your financial goals while managing your loans effectively.