Diploma almost in hand, most graduates are anxious to get going to the next chapter. College educated young men and women are eager to get their first job in their chosen fields. So, why, in the midst of moving ahead, is it necessary for soon-to-be graduates to complete a college exit interview?

The answer is simple: before you graduate, or if you drop below half-time attendance, federal regulations require you to complete an exit counseling session if you have federal student loans.

Paying Your Student Loans is Serious Business

The reality is – you must pay back your loans – even if you don’t complete college or find a job in your chosen field.

The purpose of the exit counseling session is to give you a better understanding of your student loans and general information about managing your finances. You will learn about repayment plan options, consolidation, deferment and forbearance as well as your rights and responsibilities as a borrower and the consequences of defaulting.

Your college financial aid office arranges the exit interview, often online on Mapping Your Future (www.mapping-your-future.org). More colleges in New York are choosing to include additional counseling or workshops in an effort to teach borrowers financial management and budgeting skills.

Paying Loans Affects the Rest of Your Life

Your first job, first apartment, perhaps a first car payment and your student loan all impact the quality of life you will experience after college. Life after college, whether you move back home with your parents or to your own place, requires a budget to help you live within your means and manage your payments.

Your college financial aid office may be able to help you plan a personal budget or you can use an online budget calculator found at www.hesc.org. There’s also a debt/salary wizard to help you determine how much income you need to meet your student loan obligation.

Creating and sticking to a budget will put control of your finances in your hands so you can make informed decisions about your income and your current and future expenditures.

What if You Can’t Pay?

Bill and Sandy had been saving every penny for their first house. They found the perfect home in a great neighborhood and made an offer. To their surprise, their bank turned them down for a mortgage…several years before, Bill had defaulted on a college loan and he was considered an unacceptable risk.

A common myth about student loans is that you can default on them and not get into trouble…wrong. Another myth is that you can declare bankruptcy, even if you have student loans…wrong, again.

If you are late paying your student loans, you are delinquent; or if you don’t pay them at all, you will be considered in default. Default means trouble!

First, your entire loan becomes due. Collection charges may be added to every payment you do make. To ensure your loan gets paid, the government may withhold your federal and New York State tax refunds or even part of your wages (called garnishment). You may be ineligible for further student aid or other credit….and since this information is reported to the national credit bureaus, your credit report will be in shambles for many years to come.

But none of this has to happen. You may have special circumstances that make you eligible for other repayment options, including forbearance and deferment. Even if you’re in default, there’s still help through a variety of programs.

Helpful Tips

In a nutshell, planning, organization and communication are the keys to managing your student loans. Here are some helpful tips to keep on top of your loans:
      • Keep all your student loan documents in one folder.
      • Stay in contact with your lender/loan servicer.
      • Make sure to tell your lender or loan servicer when you change your name, address, telephone number, graduation date, or school status.
      • Keep a record of important communications, either by mail, phone or e-mail. Make sure to jot down the name of the person to whom you are speaking.
      • Create a budget and stick to it.
      • Open all your mail and read everything concerning your loan.
      • Never hesitate to ask for help if you find yourself heading for trouble.
      • If you don’t understand something, call your lender or loan servicer.

Remember, unlike grants and scholarships, a student loan must be repaid.

posted 8/8/2007