The Financial Side of College Graduation Program Recap

Thank you to Samantha Benson from the Higher Education Student Assistance Authority for her presentation on what life looks like after graduation in terms of student loans and the costs of graduation school.  The most important thing regarding you or your children’s finances after graduation is to make sure you understand all the details of any loans.  Some loans have a grace period (such as 6 months for Federal Stafford Loans) before any money needs to be paid back.  Consolidation is an option many people take to reduce their monthly payments and interest rate, but it may extend the life of the loan to 30 years and prevent you from over-paying on the loan.  Repayment options (federal loans) include:

  • Standard
    • 10 years
    • Highest payment, but lowest total amount
    • will be auto enrolled after school if no other choice is selected during Exit Interview
  • Graduated
    • 10 years
    • Payments start off low, but increase roughly every 2 years
  • Extended
    • About 25 years
    • Payments are lower, but life of the loan is greatly extended, requiring more to be paid back
    • Must have at least $30,000 in student loan debt
  • Income-Based
    • 20-25 years of qualified payments, then rest is forgiven
    • 10-15% of discretionary income
  • Income Contingent
    • 25 years, then loan is forgiven
    • 20% of discretionary income OR amount if loan was for 12 years, whichever is lesser
    • Payment is calculated each year based your AGI (and spouse’s if married), family size, and amount of loans
  • Pay as you Earn
    • 20 years, then loan is forgiven
    • capped at 10% of discretionary income
  • Revised Pay as you Earn
    • 25 years, then loan is forgiven
    • Payment is calculated each year based your AGI (and spouse’s if married)
    • Payments may be higher than Standard repayment

If a loan is forgiven, the remaining balance MUST BE declared as income on your federal taxes for that year!

There are also federal and state loan forgiveness programs that will forgive your student loan debt if you meet certain requirements, such as work in qualified public service job for 10 years.  For more information

For more information on repaying Federal Direct/Stafford loans, please visit https://studentaid.ed.gov/sa/repay-loans.  For more information on managing your loans after school and preparing for the job market, please visit https://www.mappingyourfuture.org/planyourcareer/.  For a wide variety of information on repaying student loans, please visit http://www.hesaa.org/Pages/PayOnline.aspx.

You can also view a sample Repayment Plan Summary at https://www.njstatelib.org/wp-content/uploads/2018/05/Repayment-Plan-Summary.pdf.

About Andrew Dauphinee

Education and learning are passions of mine. Lifelong learning is a core part of who I am and I strive to pass that desire for information on to everyone I meet. As the Instruction and Outreach Librarian, it is my goal to provide quality, informative, and relevant programming to meet the diverse needs of our patrons. Please contact me regarding programming at adauphinee@njstatelib.org.