It’s that time of year, the weather is warm and graduation caps are flying! Congratulations to all of you who have just graduated and are on the path to becoming a full-time therapist. Along with the beginning of a new career and a bright future comes the reality of entering the “real world”. For many of you this means earning an income but it can also mean the responsibility of paying back those hefty student loans. It’s important to be knowledgeable about your student loan situation because there can be harsh penalties if you fall behind or fail to pay back your loans.
First, you have to familiarize yourself with the lingo. While you’ve spent years perfecting therapy techniques, chances are you haven’t studied up on common student loan terms. Here are some terms you should know:
- Loan Principal – The original amount you borrowed, not including any interest you’ve been charged.
- Interest – The amount you “pay” for taking out the loan.
- Capitalized Interest – This is the interest accrued during a period when a student loan holder isn’t required to make payments (i.e. in school). It is added to the principal of the loan.
- Consolidation – Combining loans into one monthly payment (be aware that this often spreads out the repayment of all the loans over a longer period of time).
- Grace period – The time after you graduate before you have to start making payments on your loan.
- Default – When you stop making payments, this has serious consequences.
- Deferment – If you meet certain criteria, repayment is postponed and interest does not accrue on subsidized loans. However, it does accrue on unsubsidized loans.
- Forbearance – This can be a temporary fix if you don’t qualify for a deferment. Forbearance allows you to stop making payments, make smaller payments, or extend the length of your repayment period. However, interest will accrue.
- Repayment plans – Different repayment plans are often available to meet the needs of the borrower. Be sure to check with your loan servicer or lender.
Second, it is important to understand what kind of loan or loans you have. There are federal and private loans. If you have federal subsidized loans, the government pays the interest while you are in school and during the grace period. If you have federal unsubsidized loans or private loans, you are responsible for all interest accrued. Depending on which kinds of loans you have will determine the best method of repayment. Not sure what kind of loan you have? You can visit the National Student Loan Data System (NDLS) and enter your social security number, date of birth, and PIN given to you by the Department of Education. If you don’t know your PIN you can apply for one. Don’t see your loans coming up in the database? You probably have a private loan.
As far as repayment is concerned, it is advised that you focus on paying off your private loan while making minimum payments on your federal loans. This is because private lenders are not obligated to work with you when you experience any financial duress while federal loan servicers are. Once your private loans are paid off, you will have greater flexibility with your payments on your federal loans. Be sure to focus on paying off the federal loans with the highest interest rate first.
The best thing you can do is sit down and make a budget for all of your expenses including your loans. Most importantly be realistic and make sure you read and keep all communication regarding your student loans. This way you’ll be prepared to make the monthly payments. If you are ever having trouble making your loan payments, contact your loan servicer or lender as soon as possible. There may be options for you to reduce your payments or postpone them temporarily. The consequences of failing to make payments can be severe so be sure to find out all pertinent student loan information sooner rather than later.
For more information on student loans check out the sites below.
Madelyn Saylor joined Aureus Medical Group in early 2012. She works as a Student Recruiter in the Rehab Therapy Student Outreach Program. Previously, she worked as an Admissions Advisor at Kaplan University, after graduating from Longwood University. In her spare time, Madelyn enjoys teaching group fitness classes, traveling, and spending time with friends and family.