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A Resource Guide For Paying Back Student Loans 

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So you got accepted to college and applied for student loans to pay for this once-in-a-lifetime experience.

While in school, you'll be concentrating on your studies, looking for romance, going to parties and growing up.

During such an exciting and formative time, forgetting about those student loans might be easy.

But don't put them aside. You're going to have to pay them back, plus interest. Typically, you'll have to start paying about six months after graduation.

Sylvia Jones, assistant vice president with Wells Fargo Financial Services, said schoolwork isn't the only kind of homework college students will encounter.

"We also have a (repayment) calculator about putting the information in, as far as tuition payments. It can calculate what repayment might be," Jones said. "We want an educated student who asks, 'If I borrow this much debt, how can I repay? What kind of monthly payment will I have?' And it's important to align their major with the type of debt they anticipate."

Another key point for a smooth post-gradation debt-repayment transition is knowing your loans and lenders.

"When students are looking at the college planning process, they can consider two types of loans: federal loans and private loans," Jones said.

There are two types of federal loans: subsidized and unsubsidized. The difference here is that on subsidized loans, the government takes care of interest while someone is in school or during an authorized deferment. This is not the case with an unsubsidized loan.

"They should consider those loans because interest rates are sometimes in the four-percentage category," Jones said. That's a really good interest rate.

However, there are situations where the amount of federal loans and scholarships don't cover all college tuition expenses.

"If there is a gap, they may want to consider private loans," Jones said.

So you've collected some debt and have graduated college and, hopefully, have landed that first life-changing gig.

During this time, Jones advises graduates use what's called a grace period, typically about six months long, when people don't have to start paying back those loans. This is a great time to understand your income and how your student loan repayments will fit into your monthly budget.

While it may be smooth for some, other graduates may struggle with balancing a host of new financial responsibilities — especially if pay isn't all that great.

"I was a financial aid director before I started working for the bank. I always tell the student that there are so many repayment options and they need to contact their lender and make sure they have a conversation with them," Jones said. "If they just make that phone call, they can figure out a good way to get repayment or forbearance, and the key is to not default."

The bottom line is: Know your debt, know your lender and communicate with your lender, because there are different payment plans.

"Don't start out on the wrong foot," Jones said.

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June 16, 2021

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