Tips on handling student loan debt

By Anna Swindle

For the AJC

Graduating from college is exhilarating, with new-found freedom, often in a fresh city with new and interesting people. But those transitional times can also bring uncertainty, spawned by the high unemployment rate, the wobbly economy and confusing student loans. And even if you think you’ve got life all figured out, the government will be introducing new loan-related regulations this summer.

To keep things from feeling too overwhelming, , we’ve rounded up some common questions both students and recent grads have about the loan process.

Q: Who can you go to find someone who will speak plain English about this process?

A: “I always refer people back to the financial aid people at their college,” said Cindy Bailey, a senior policy analyst at College Board. “They’re the most generous, well-meaning people in the world. They want to be helpful to kids and their families.”

Q: The system is changing. What’s going to be different?

A: If you’ve tried to get lender advice from your school’s financial aid office in recent months, you may have received an interesting reply: “The Office of Financial Aid does not recommend specific lender names to students.” That change, which went into effect this past February, came as a result of the Health Care and Education Reconciliation Act and beginning July 1, the rules will change even more. No longer will schools be allowed to go through banks or credit unions, as many have been doing under the Federal Family Education Loan (FFEL) system. Now, all federal student loans will come straight from the U.S. Department of Education under the Direct Loan Program.

Q: What if you graduated and the grace period on your loans has ended, but you are not able to make the minimum payments?

A: The best thing to do in this situation is to contact your lender as soon as possible. If you’re late or delinquent on payments, that can begin to affect your credit. .

Q: Should you consolidate your loans?

A: First of all, it’s important to understand what loan consolidation means. Essentially, consolidating a loan means you combine all your loans (for example, a federal and a private loan) into one lower payment. The second part of consolidation is that your repayment time is extended.

For people who either have several types of loans or who are having trouble making complete monthly payments, consolidation can be the right option. If you’re able to pay your student loan bill pretty easily each month, though, the best advice is  not to consolidate.