Student Credit & Money Management Services - Iowa Memorial Union: The University of Iowa

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Student Credit and Money Management Services

Student Loans / Paying Off Your Loans

If you were lucky, or studied hard, or both, you may have had relatives or scholarships to help you pay for your education. If you're like most folks, though, you had to take out a couple of loans to take care of those U-bills.

As long as you stay in school at least half-time, the government (or private lenders, if that's where you got your loans) generally won't come after you for payment. But once you're done, you have only six months before Uncle Sam comes calling.

First things first: don't skip out on your exit counseling.

It's one of the most important things you can do to understand the debt burden that you've acquired and how long it will take you to pay if off, as well as what to do if you can't find a job or encounter unexpected financial hardship.

Second, sit down with financial counselors.

Talk to the financial counselors at Consumer Credit Counseling Service (on campus at 335-3239). They can help you figure out whether consolidation loans will save you money. They can also work with you on how to budget so that your loan payments don't leave you broke at the end of the month.

Still worried about how you'll pay off the loans?

OK, let's look at a worst-case scenario. Suppose you do the exit counseling (look at you, very responsible!), and you figure out how much you're going to have to pay every month toward your loan debt. And it all goes well, until you have a bad car accident and can't work for a while, or your mom gets sick and you have to move home to help her out, or you lose your job suddenly because, hey, last-hired-first-fired. What do you do now?

You can quickly and easily apply for a forbearance, or a deferment, or have your loan payments lowered. This might change the length of time it takes to pay the loans off, and interest will still accrue while you're not making payments, but it can save you not only the stress of trying to make that payment every month, but also the pain of late payments and collection action on the part of your lender.

If you have federal loans, go to studentaid.ed.gov. There, you can find out more about the different methods of repayment, like the Income Contingency Repayment Plan and the Graduated Repayment plan, plus how to let your lender know that you're currently unemployed and that you can't make any payments for the time being. You can also easily find out exactly who your lenders are, and what kind of loans you have.

If you have a private loan, it's a good idea to call your lender as soon as you begin to worry about making payments. They can often work out a change of monthly payment for you, and as long as you're honest with them (and yourself) about how much you can afford to pay back each month, they usually appreciate your contacting them instead of just skipping payments.