|
You filed your last term paper. Pulled your last all-nighter.
And as you enter the proverbial real world with college degree in
hand, you reflect with pride on your academic achievement and embrace
with newfound confidence the personal and professional challenges
that lie ahead.
A little advice? Don't close the
book on campus life just yet. Your biggest test is yet to come.
As the estimated 2.8 million college graduates descend
upon the job market this year, most face the daunting task of repaying
tens of thousands of dollars in student loans. Many have no idea
how much they actually owe or to whom payments should be directed,
leaving even the most well-intentioned borrowers more vulnerable
to delinquency and default.
"The first year of repayment is tough, because
that's when recent grads are moving from job to job, they're not
being paid as much as they hope to be down the road, and they're
physically moving (into homes or apartments), so just keeping track
of their loan paperwork can be difficult," says Robert Shireman,
executive director of the nonprofit Project
on Student Debt in Washington, D.C., and Berkeley, Calif.
It's hard to blame them. With college tuition costs
soaring faster than the rate of inflation -- 7 percent a year, according
to the College Board -- many degree seekers are forced to finance
their educations with a hodgepodge of federal loans, personal loans
and supplementary cash from the "Bank of Mom and Dad."
Student loan packages often include both subsidized
and unsubsidized Stafford Loans, PLUS loans and private education
loans to cover additional living expenses -- all of which offer
different terms, interest rates and repayment schedules. Those with
exceptional financial need may also have subsidized Perkins loans
tossed into the mix.
The National Center for Education Statistics reports
some 66 percent of graduating seniors financed their undergraduate
education using loans in 2003-2004, the most recent school year
for which data are available. Their average cumulative debt that
year was $19,202, up from $13,171 in 1995-1996. And that doesn't
include any credit card debt they may have accumulated.
Senior year, undergraduate students carried an average
outstanding credit card balance of $2,864 in 2004, according to
Nellie Mae, a subsidiary of Sallie Mae, which provides both federal
and private education loans.
"For many, student loans are a first borrowing
experience, so it's all about understanding your rights and responsibilities,"
says Martha Holler, a spokeswoman for Sallie Mae. "When you
graduate, you may not remember what your mixture of loans is."
Organization is key
The first step to managing student debt is to get your ducks in
a row.
That means pulling together all documents received
from lenders, including application forms, promissory notes, disbursement
and disclosure statements, and repayment schedules. It's also wise
to keep copies of all correspondence between you and your lender
and your financial aid office.
If you haven't done so already, start a filing system
now to help organize
your paperwork, which you should plan to keep until well after
your student loans have been repaid.
|
