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Welcome to Knowledge for College brought to you by Chase, and thanks for joining us. This series of videos provides valuable information on the many important steps of going to college and financing an education.

Hi, I’m Chelsea Richardson. After college comes repayment—if you have student loans. Ken Butler has the details on what to expect and how to make it easier.

Student loans must be repaid—that you know. But did you know that there are different ways to repay your student loan? That’s really important since many of us leave school facing different financial situations.

Before you leave school, make sure you find out when your loan payments will begin, how long you have to repay your loans and what your repayment schedule looks like.

Many students don’t have to make payments for student loans while they’re in school – and some students may also have a grace period.

The grace period occurs after you leave school and ends when you are required to start making payments.

The grace period for Federal Stafford loans is six months. However, there is no grace period for Federal PLUS loans. And private loans may offer a grace period as a borrower benefit—check with your lender to find out.

But remember, you don’t have to wait until you enter repayment to make payments. If you repay your loan early, you’ll pay less in interest overall.

Once you start making payments, you’ll typically have 10 to 25 years to repay federal loans, depending upon the repayment schedule.

The length of time you have to repay private loans varies between lenders and usually depends on how much you borrow.

While private loan repayment schedules may vary, there are four kinds of federal loan repayment schedules.
 
The first, standard (or level) repayment requires you to make fixed monthly payments throughout the life of the loan.

Graduated repayment allows you to make lower monthly payments that gradually increase during the repayment period.

Income-sensitive repayment adjusts your monthly payments annually based on your gross adjusted income.

Finally, extended repayment allows qualified borrowers with at least $30,000 in federal student loans to extend their repayment plan up to 25 years.

No matter what your repayment schedule looks like, you need to make your payments on time each month.

In some circumstances like financial hardship or graduate school, you may be able to temporarily stop making payments or make lower payments – this is called deferment or forbearance. If you qualify for deferment, you don’t have to make payments of loan principal for a set period of time, but you still may be charged interest.

If you’re granted forbearance by your lender, you’re allowed to temporarily stop making payments or make lower loan payments; however, you’re responsible for the interest that accrues during that time.

If you fail to repay your loan, you’ll be in default. And, defaulting on a loan can hurt you financially. Your credit report will be negatively impacted, which may make it harder for you to get a credit card or another loan. Your school may hold your transcripts, you may be denied additional financial aid and your wages may be garnished. Finally, liens could be placed against your property and against your taxes.

To avoid default, make payments on time each month – if you can’t, contact the lender immediately to discuss your options. And, make sure that each of your lenders has your current address and contact information so they can notify you about important loan details.

For more information about repayment, visit StudentAid.ed.gov or contact your private loan lender.

The Knowledge for College informational video series is brought to you by Chase to help you better understand college financing and other important topics regarding higher education. If you have any questions about your specific situation, you should consult your own financial advisor or the financial aid office of your school.

Important Information: Deferred payments may be available while you are in college, unemployed, or experiencing economic hardship.

New Stafford borrowers after October 7, 1998, whose total outstanding principal and interest in FFELP loans exceed $30,000, may repay on a level or graduated repayment plan for a period that may not exceed 25 years.

As students determine the best way to finance their education, they should consider the full range of student financial aid options available. Private loans, like the Chase Private Student Loan, can be used when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of education.

This information was current as of 09/01/2008.

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