The Loan Dilemma: What Can We Do Now?

With the job market more competitive than ever, a college degree has become a necessity not a luxury. Though most seek a college education, tuition prices are climbing hirer annually and more and more families must look to federal and private loans to be able to afford an education.

To a naïve first year student, a loan simply means that you can afford to go to your college of choice. The time to pay off loans seems abstract and far into the future. However, for graduating and rising seniors, loan debt can seem looming and intimidating. The biggest advantages a student can have to pay off debt are knowledge of the system and a sense of responsibility with his or her money.

One of the best ways to manage your cash is to create a monthly budget. This budget should include everything, not just groceries and necessities, but things that you know you will spend money on realistically – entertainment, clothes, money spent on alcohol. Budgeting now, while you’re still in college, will be very helpful later in life. As college students, most of us are still supported by our parents financially. However, after college, we will have more bills to pay and more expenses to keep track of.

Another way to stay debt free is to limit credit card usage. Everyone likes the idea of buy now, pay later, but when you can’t afford to pay later is when bills pile up. Credit cards are good for building credit, but can be extremely harmful if you rely on them and can’t pay your bills later on. If you already have debt from student loans, it would be unwise and difficult to add credit card debt on top of it. Whether your student loan is for a few thousand or several thousand dollars, it is important for you to know your rights within the system. All students have the right to ONE six-month grace period.

This six-month grace period allows you time to settle, and begins the day after your graduation, assuming that you are not going onto graduate school. If you are, it begins the day after you stop attending school at least half-time.
You have a right to choose your own payment plan. To find which one is best for your individual situation, use an online loan calculator from websites only ending in “.gov.” Remember when choosing your payment plan that the longer it takes you to pay back your loan, the more interest that you pay. Though the idea of having 30 years to pay back your loan may sound appealing, don’t forget that that includes 30 years of interest on your loan.

The most critical thing to know about repaying debt is to do so in a timely manner. Late payments can be penalized by your lender. A lender has the right to charge a late fee and report you to national credit bureaus, even if your payment is just one day late. To prevent late payments use auto-debit through your bank account and know when the bill is coming. Auto-debit allows you to select an exact day that the bill will be paid.

Paying a loan late by six or more months results in the default of the loan. This means that the entire unpaid amount is due along with collection costs, all national credit agencies are notified, you are no longer eligible for any student or federal aid, and you cannot defer your loan.

The government can also seize your tax refunds or garnish your wages in an attempt to balance out the money owed. Always avoid defaulting on your loan. It is better to contact your lender and explain the situation than it is to go into default. Most lenders understand individual situations and may make exceptions.

To avoid default, you can postpone a payment if you are deemed qualified, meaning: you are in school half time, have a graduate fellowship, disability rehab training, are unemployed (three-year limit), are serving on active duty in the Military/National Guard, or are experiencing economic hardship (underemployed, Peace Corps).

To request deferment you must call your lender and submit the required documents. After doing so, continue to make regular payments until you know that your deferment has been granted.

For more information, contact the HWS Financial Aid office and you can set up an appointment to discuss your own personal situation. Also go to, which provides a centralized and integrated view of all Title IV loans and grants.

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