For seniors, it's time for payback

“About 11 to 12 days. That’s how long thousands of University of Akron students have until graduation, depending on when you’re reading this. The moment most of them walk across the stage, a new countdown will begin. It’s student loan repayment, and it’s not nearly as exciting.”

About 11 to 12 days.

That’s how long thousands of University of Akron students have until graduation, depending on when you’re reading this.

The moment most of them walk across the stage, a new countdown will begin.

It’s student loan repayment, and it’s not nearly as exciting. For most students, it can be a scary, confusing time.

In a lot of cases, student loan repayment is a student’s first experience with high finance, said Doug McNutt, director of student financial aid at UA. We provide a lot of help for them, but in the end it’s up to the student to do some of their own research to figure this thing out.

Each public university in Ohio is required to conduct entrance and exit interviews for all students using loans to pay for their education. The entrance interview focuses on explaining that the loan will need to be paid back and the stipulations that come along with that. The exit interview again talks about those issues and focuses on payment and deferment options, McNutt said.

Students have a lot of options when loan repayment time comes. For many, terms like consolidation and deferment sound pretty foreign.

Here’s a crash course.

Consolidation is a process of combining two or more Federal Stafford or Perkins loans into one new loan that has a longer repayment term and a single monthly payment that is smaller than the sum of previous monthly payments.

If that sounds like gibberish, you may want to meet with an adviser from the financial aid office.

The exit interview is an online process that answers a lot of general questions students might have, McNutt said. Beyond that, students can come into the financial aid office anytime to ask more specific questions.

If a student does that, a staff member might explain that there are pros and cons to consolidation.

By consolidating federal student loans and extending the repayment term (up to 30 years, depending on the total loan amount), repayment may be easier for some students. However, consolidation comes at a price.

One trick that really needs to be pointed out is, if someone is offering to drastically reduce your payments, they do that by extending the loan repayment, McNutt said. Your monthly payment might be half, but in the long run you’ll be paying a lot more interest to buy it.

Knowledge is power when it comes to student loan consolidation. You have to be able to look at a consolidation option and ask yourself, ‘What am I going to have to pay by the time this thing is done?’ You have to look at the big picture long term.

McNutt encourages students to speak directly with their lenders after graduating. Openly communicating and being willing to learn is a key to successful loan management, he said.

When you consolidate, lenders generally take a look at your payment history and then come up with a weighted average to determine a consolidated interest rate and payment period, McNutt said. There are a lot of people out there, who aren’t necessarily out to screw you, but that don’t have a strong track record. I recommend looking at two or three trusted lenders before consolidating.

Deferment is another, less common option for graduating students. A loan deferment is an authorized period of time during which a student loan borrower may postpone making payments.

There are a lot of reasons to seek deferment, an obvious one being medical troubles resulting from an accident, McNutt said. If for some reason, you just can’t pay, you need to go to your lender and discuss your situation. If you qualify, there will be options for either partial or full deferments.

Most student loans must be paid back either six (Stafford loans) or nine (Perkins loans) months after graduation.

Regardless of whether you plan to consolidate over a longer period of time, or if you plan to attack your loans head on, let the countdown begin.


” #1.1362017:493829888.jpg:front 1.jpg:UA’s director of student financial aid, Doug McNutt, explains the pros and cons of consolidating student loans after graduation. His office provides financial counseling for students.:Joe Habbyshaw”