Loans are a valuable tool for financing your education. They also require careful planning and management. Knowing the terms of your loan and understanding your responsibilities can help you stay on track with your student loans and build a strong financial future.

These resources can help:

Planning and Managing Your Loan
Repayment Options and Alternatives
Ensuring Your Financial Future

Planning and Managing Your Loan

Repayment Calculators
Use online repayment calculators to preview how long it will take you to repay your loan and what your monthly payments may be.

National Student Loan Data System
Track your federal student loans online, 24 hours a day, seven days a week with the National Student Loan Data System (NSLDS). To access the website log on to the National Student Loan Data System using your FAFSA Personal Identification Number (PIN), your Social Security Number, the first two letters of your last name, and your date of birth. If you think that NSLDS records are incorrect, contact your lender, your guarantee agency, or the loan servicer.

Student Financial Aid (SFA) Ombudsman
The Ombudsman serves as an independent, neutral third-party who will assist you by researching financial aid problems or complaints and recommend solutions. The Ombudsman cannot reverse decisions but will help contact other agencies on your behalf. Contact the Ombudsman as a last resort after you have attempted to resolve the issue yourself. See the Ombudsman’s website for tips about conflict resolution.

Repayment Options and Alternatives

Repayment Options
After borrowers cease to be enrolled at least half-time, they begin to use their one-time-only-six-month grace period. Borrowers of the Federal Direct Loans enter repayment after their six-month grace period expires. Effective July 1, 2012 for the 2012-2013 academic year, the federal government will no longer pay the interest on Federal Direct Subsidized Loans after the borrowers graduate with an undergraduate degree. All repayments options, with the exception of the income-based repayment plan, require that each payment must be at least equal to the interest accrued on the loan between scheduled payments. 

Standard Repayment
Borrowers repaying loans under the standard repayment plan pay a fixed amount of at least $50 each month for up to ten years, not including deferment and forbearance periods. This plan generally repays the loan with the lowest interest cost to the borrower.

Graduated Repayment
Borrowers' payments are lower at first and then increase. An important feature of this plan is that no monthly payment will exceed more than three times any other monthly payment. Borrowers using this plan typically repay a greater amount of interest than they would have under the standard repayment plan.

Extended Repayment
Borrowers may repay over a 25-year period on a standard or graduated repayment plan if they have loans totaling more than $30,000 and were new borrowers on of after October 7, 1998.

Income-Contingent Repayment
Monthly payments are based on adjusted gross income (AGI, plus spouse's income if married), family size, and the total amount of Direct Loans. Borrowers have 25 years to repay and the unpaid portion will be forgiven. However, borrowers may have to pay income tax on the amount that is forgiven.

Income-Based Repayment
Borrowers in repayment or entering repayment who have a partial financial hardship are eligible for income-based repayment (IBR). The federal government may pay interest during a portion of the repayment period. Monthly payment amount may be adjusted annually.The maximum repayment period under this plan may exceed ten years.

Student Loan Consolidation
If you're holding more than one student loan, loan consolidation can offer a way to reduce your monthly payments and simplify loan repayment. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1% and cannot exceed 8.25%. You may lose certain benefits (such as cancellation benefits, interest subsidies, etc.) that were offered on the loans being consolidated.

Student Loan Forgiveness Programs
Students in teaching, public service, community service, military, and nursing may be able to take advantage of programs that offer loan forgiveness in exchange for work in high-need areas.

Tax Benefits for Loan Repayment
In 1997, new tax laws were issued concerning college savings, payment, and repayment. Since tax laws do change, refer to your tax accountant for further information on these programs and how they may affect your personal tax situation. HMC does not provide tax advice but a summary of Tax Benefits for Education (Publication 970) and Tax Information for Students are available on the IRS website, which outline benefits to help you, including:

• Student Loan Interest Deduction
• Tax Credits for educational expenses

Ensuring Your Financial Future
Keeping track of your credit and maintaining a strong credit record is crucial to your financial future. The score on your credit report will determine whether banks and other lending institutions will give you loans for houses, cars, and business.

It is always a good idea to check your credit report for any errors or marks that will affect your ability to borrow in the future. Get your free annual credit report at www.annualcreditreport.com. 

Financial Planning
As you begin to take responsibility for your financial future, it is important that you learn about financial management. This includes managing your budget, student loans, other debt, credit cards, and other financial obligations. These online resources can help:

• Financial Tip Sheets, tips from The College Board
• Sallie Mae's Education Investment Planner

Last Updated: November 2011