You probably wouldn’t start a road trip without knowing where you are going and the best way to get there, so why jump into a student loan repayment strategy without the same level of planning and preparation?
For Spring 2009 graduates, November marks the end of the six month deferment period for student aid. And while the full payment of student loans may seem daunting, a few simple and timely steps, along with knowledge of your options, can make for an easier journey.
Think of it as your repayment roadmap from PNC Bank, N.A., one of the nation’s top student lenders.
Find the Right Route
How long you take to pay your loans will impact the amount of money you pay back overall. An aggressive approach will probably save you the most money in the long run, but what is important is finding the option below that best fits your funds and lifestyle.
Standard Repayment–Generally a fixed monthly payment of at least $50 over a period of up to ten years.
Extended Repayment* – Reduce your monthly payment by extending the repayment term for a period of up to 25 years.
Graduated Repayment – Payments start low and increase over time. This may be the right choice if you currently have limited income but expect higher earnings in the future.
Income Based Repayment (IBR) – Payments are based on income and family size – usually, 10 percent of your income or lower – and adjustable annually. A new repayment option as of July 1, 2009, you may qualify if your loan payments exceed 15 percent of your income.
Loan Forgiveness - Those working in certain fields, such as public service, government or non-profit, may be eligible for loan forgiveness. Check with your state or U.S. Department of Education to see if you are eligible.
Lighten the Load
Always pay your higher interest or variable rate loans first. Wherever possible, pay down your principal to slow the build-up of interest. This can usually be accomplished with a written request.
Be sure to check if you lender offers incentives for good repayment habits. For example, PNC offers a quarter percent interest rate deduction for taking advantage of automatic payments.
If you are still in school, start repaying interest on unsubsidized loans now to save on interest expenses later. Think about opening an interest-bearing savings account and depositing the amount of your student loan interest accumulation on a quarterly basis to pay off at graduation.
What your lender doesn’t know can end up costing you…a lot.
Your lender is available to help make your loans manageable and to help you avoid default. If you are going back to school, are unemployed or are just going through a tough time, you may be eligible for deferment, so it is important to stay in touch with your lender and to alert them to any changes in your employment or contact information.
Before you embark on the road to repayment, it is important to sit down and map out the best strategy for you. In a world of GPS and navigation systems, let your lender, financial aid office and knowledge of the options available help you chart a course that will meet your needs every step of the way.
For more information, visit www.pnconcampus.com or call 1-888-762-1001.
This was prepared for general information purposes only and is not intended as legal or tax advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk.
• Available for example if you received a FFELP (Stafford Loan) after Oct. 7 1998 and have more than $30,000 in eligible loans outstanding.
By Thomas Lustig, manager of Education Lending for PNC Bank
PNC Bank, National Association. Member FDIC
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