For Immediate Release: June 1, 2009

The clock is ticking on the grace period for federal student loans. Recent college graduates are reminded to start planning for repayment which, for many federal student loans, will begin this November.

New graduates are encouraged to review their loan options and understand their rights and responsibilities. The New York State Higher Education Services Corporation (HESC) is the State’s comprehensive student financial aid agency, and offers tools, calculators and advice to help prepare for repayment.

Remember, you must repay your student loans, even if you do not complete your academic program or are unable to find employment after you graduate.

Here are some tips to help manage student loan debt and work toward a bright financial future:

Know your student loans. It’s important to know exactly how much money you owe and to whom you owe it. Log onto the National Student Loan Data System (NSLDS) to review all your federal student loans; the database has records of the total disbursements, the lenders and servicers for each federal loan you may have. The database does not include alternative or private loans – check with your school’s financial aid office or bursar if you think you have private loans, but cannot find the promissory notes. The terms and repayment options on these loans may be different than the federal student loans.

Choose a repayment plan. After graduating, leaving school, or dropping below half-time enrollment, borrowers generally have six months before repayment begins. A repayment plan is arranged with the lender during this grace period.

Options include a standard repayment plan with equal monthly payments of at least $50 with a maximum of 10 years to repay; a graduated schedule starting with a low monthly payment that will gradually increase; or an income-sensitive repayment plan based on income.

A new option for federal loan repayment will begin July 1. Income-Based Repayment (IBR) will cap monthly payments at a reasonable percentage of income for borrowers with heavy debt burdens or low incomes. The program will cover almost all federal loans, whether you borrowed through a lender or directly from the federal government.

Keep in touch. Contact your lender about any changes in status or anything affecting your ability to repay the loan. Changes may include transferring to another school, name or address change, leaving school, graduating, unemployment, or a serious or lengthy illness.

Contact your lender immediately if you have a problem making your student loan payments. If you fail to repay on time, your loan becomes delinquent. If you stay delinquent, you will default and the entire loan balance becomes due. Don’t let payment problems get out-of-hand…work with your lender at the first sign of difficulty.

Managing your student loan intelligently is an important step you can take to establishing a good credit history, which can help you reach your financial goals throughout your life. Go to HESC.org for important budgeting, smart borrowing and money management advice. By following our common sense tips, you can meet your obligations, avoid common pitfalls and help safeguard your financial future.

About HESC: The New York State Higher Education Services Corporation is the State’s student financial aid agency, providing more grant and scholarship money to college students than any other state in the nation. The state’s student financial aid agency helped nearly 650,000 students achieve their dream of attending college by providing $4.5 billion in grants, scholarships and loan guarantees in 2007-08, including $795 million awarded through the Tuition Assistance Program (TAP) to more than 370,000 students. HESC also provides training and technical services to financial aid administrators, high school counselors and lenders.

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Editors: for more information, please contact Kathy Crowder, HESC's Senior Vice President for Communications, at (518) 402-1448 or via email at kcrowder@hesc.org.