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What to do when your first student loan payment is due

The following article is from the Associated Press Newswires / The Washington Post

December 2, 2019

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The first student loan bills are arriving for the Class of 2019. If the grads are able to stick to the standard plan, they'll make payments every month for the next 10 years and be done with it.

But not all borrowers will knock out their loans so quickly. Among federal loan borrowers who began taking on debt in 2003-2004, just 1 in 4 had paid off their debt by 2015, according to the most recent data from the National Center for Education Statistics. As for the students with debt remaining, about 39% were still in repayment.

This year's recent graduates can improve their odds by setting a plan now to pay back the debt and stay on track moving forward, no matter what obstacles pop up.

"A plan will alleviate the stress you feel when you're unsure about what life looks like after college, and you have this debt to pay," says Tracie Miller-Nobles, an associate professor at Austin Community College and a member of the American Institute of CPAs' Consumer Financial Education Advocates.

Get Details On All Loans

Don't wait to find out how much money you owe. There's a chance your bill won't arrive before your first due date, student loans experts say.

"Just because you don't get a bill doesn't mean you don't owe the money," says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.

For federal loans, go to the student aid website or the National Student Loan Data System. To find private debt, visit annualcreditreport.com for a credit report, which lists private loan debt and the lender.

Once you know who holds the loans, call it to check or update your contact information. You can also create an online account to track payments.

Find the Right Repayment Plan

Your repayment goal should be to pay the least amount over time, Mayotte says. That's because the longer you pay off the loan, more interest will accumulate. For most borrowers, the standard 10-year repayment plan is the cheapest option.

For others, that may mean pursuing a loan forgiveness program, like Public Service Loan Forgiveness, which forgives federal loan debt after making 120 payments on an income-driven plan while working full-time for the government or a qualifying nonprofit.

High earners may pay off loans faster by asking their servicer to apply additional payments to their loan balance.

It's borrowers who face modest incomes or job uncertainty who have some thinking to do.

"There are a lot of options, and borrowers tend to get confused or distracted because there are so many options that aren't that drastically different," says Abril Hunt, outreach manager for ECMC, a nonprofit organization focused on student success.

Hunt recommends that borrowers who can't make payments on the standard plan try Revised Pay As You Earn, or REPAYE. It's the income-driven repayment plan that all graduates with federal loan borrowers can enroll in.

An income-driven repayment plan, like REPAYE, sets payments at a portion of your income, which can help fit them into your budget. You'll need to recertify your income each year. If you lose your job or don't have one yet, your payments could be as little as $0.

If you're not sure which plan to choose, use the Department of Education's repayment estimator to find out your payment on each plan.

Automate Payments

Once you've selected a plan, make sure you never miss a payment. Enroll in autopay, but be sure to have enough money in your bank account to cover those direct payments.

Autopay can save you money, too: All federal student loan servicers and most private lenders will reduce your interest rate by 0.25 percentage points when you enroll.

Have a Plan If You Run Into Trouble

If the worst happens — a costly medical emergency or job loss, for example — contact your servicer or lender as soon as possible. They can help you work out a short-term reduced payment plan, sign up for income-driven repayment or apply for a temporary postponement.

Pausing payments for a short period can give you breathing room. But interest may continue to grow, so try to pay the interest during this time to avoid higher debt.

Re-Evaluate Every Year

Your knee-jerk move might be to pick a plan with the lowest payment possible, Mayotte says.

"That might be the right thing to do for your first loan payments, but as your income grows and your living situation changes you don't want to leave it on autopilot," she says.

Set an annual reminder to reassess your repayment strategy. That could be tax time or when you recertify your income for an income-driven plan.

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ECMC assumes responsibility for loans guaranteed by Finance Authority of Maine (FAME)

December 2, 2019

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MINNEAPOLIS, Minn. Dec. 2, 2019—Effective December 1, Educational Credit Management Corporation (ECMC) became the designated guaranty agency for the Finance Authority of Maine (FAME) Federal Family Education Loan Program (FFELP) portfolio. Since the appointment of ECMC as the designated agency was made, ECMC has been working closely with FAME to ensure a smooth transition of services for students with outstanding loans made under FFELP.

"ECMC remains committed to providing high-quality customer service that FAME customers have come to expect," said Jan Hines, ECMC president and chief executive officer.

ECMC is the designated guarantor in Virginia, Oregon, Connecticut, California, Tennessee, South Carolina and Rhode Island, and the third-party guarantor servicer for five clients.

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Beyond 12, ECMC Announce Collaboration to Coach Nearly 200 College-Bound Students

Class of 2019 ECMC Scholars Receive Support to Thrive in College and Beyond

November 18, 2019

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Oakland, CA (November 18, 2019) — Beyond 12, the innovative college completion organization, and education nonprofit Educational Credit Management Corporation (ECMC) announce a new collaboration designed to support nearly 200 college-bound students as they transition into, thrive, and graduate from their respective colleges and universities.

"We are thrilled to work with the ECMC Scholars Program to help so many talented, hard-working students achieve their dream of earning a college degree," explained Beyond 12 Founder and CEO Alex Bernadotte. "I am looking forward to using our coaching platform—which combines our dynamic human coaches, our campus-specific MyCoach mobile app, and our back-end predictive and prescriptive analytics engine—to ensure that the students we are honored to serve together thrive in college and beyond."

The ECMC Scholars Program works with high school students who have potential. By providing extra support during their junior and senior years of high school, students develop strong academic and personal skills. Working with their team, including their high school and ECMC, students learn how to be successful in getting to and through postsecondary education. In addition, students who successfully complete the ECMC Scholars Program can benefit from up to $6,000 in scholarship support for their postsecondary education.

"We are proud to work with Beyond 12, an organization that shares our deep commitment to college access and success," said Sabrina Berg, ECMC's Scholars Program manager. "This collaboration provides our scholars with near-peer support from trained coaches who understand the challenges of higher education every step of the way."

Recognizing that students require additional support in the transition to college, the work of Beyond 12 expands the investment in students with additional mentorship and guidance.

Through a student-tracking platform and a personalized student coaching service, Beyond 12 works with high schools, college access programs, and colleges to provide their students with the academic, social, and emotional support they need to succeed in higher education. Today, 85 percent of students who are coached by Beyond 12 for four years either persist or graduate from college by their sixth year, as compared to 56 percent of first-generation college students nationwide.

Both ECMC and Beyond 12 bridge the gap between K-12 and postsecondary education for students who may not otherwise enroll and complete a degree or certificate program at a college, university, or career and technical education center. Beyond 12's innovative coaching model and data tracking will reinforce ECMC's financial and high school mentoring expertise to support students as they navigate challenges to prepare for and succeed in college.

This collaboration with ECMC is just one component of Beyond 12's bold strategy to coach one million historically underrepresented college students annually by 2025.

About Beyond 12

br> Beyond 12 is a high-tech, high-touch coaching platform that helps high schools, college access programs, and colleges provide their students with the academic, social, and emotional support they need to succeed in higher education. Founded by Alexandra Bernadotte in 2009, Beyond 12 works to dramatically increase the number of historically under-represented students who graduate from college. For more information about Beyond 12, visit www.beyond12.org.

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How to start paying back your student loans

The following article is from CNBC

November 13, 2019

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For recent college graduates, the approach of December brings a dose of harsh reality.

Federal student loans, which make up the bulk of student debt, generally have a six-month grace period after graduation to give borrowers time to get on their feet before they have to start repayment.

That means grads are just now facing their first bill.

Seven in 10 college seniors graduate in the red, owing about $30,000 per borrower, according to the most recent data from the Institute for College Access & Success — a hefty tab for those just starting out.

"It's a rude awakening for a lot of borrowers," said Kaitlin Walsh-Epstein, a vice president of marketing at Laurel Road, a student-loan refinancer.

The majority, or 64%, of students are solely responsible for repaying their student loans, according to this year's How America Pays for College report by Sallie Mae. Yet half haven't even researched repayment methods, the education lender found.

For those just getting caught up, here's a cheat sheet for what you need to do:

Step 1: Know your loans

Many borrowers have several loans, each potentially with a different interest rate, monthly due date and repayment period. That can be confusing.

"Cozy up to your debt," Walsh-Epstein said. "First and foremost, it's about understanding the loans you've taken out in the first place."

The first step in building a student loan repayment plan is understanding who you owe, whether it's the Department of Education or a bank, added Ashley Boucher, a spokesperson for Sallie Mae.

Then, determine how much you owe, including your interest rates and any accrued interest as well as your monthly due date.

By default, you are likely in a 10-year standard repayment plan but there are other options, including pay as you earn or income-based repayment. Ask your lender about what plan best suits you.

Step 2: Update your contact info

Chances are you've moved, changed your email address and have a new cellphone. Make sure each lender can reach you.

"As borrowers, we are responsible for making sure our contact information is accurate, including the correct address and email," said Abril Hunt, the outreach manager at Educational Credit Management Corporation, or ECMC, a nonprofit dedicated to helping student borrowers.

Hunt recommends reaching out to each loan servicer at the outset to establish a direct line of communication. "By being proactive, we are showing lenders that we want to work with them," she said.

Step 3: Establish a budget

Take your income minus expenses, including your rent, utilities and monthly loan tab, to determine if you can afford your loan payments.

"Once you have your budget set up, you can understand what you can afford — maybe you need to get a roommate or move home for a few months to make that minimum student loan payment," said Walsh-Epstein.

Use an app to track your spending or Sallie Mae's budget worksheet to create a plan to stay on top of your finances.

If your budget feels stretched too thin, look into income-based repayment programs, which allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold. Generally, you'll qualify if your federal student loan debt is higher than your annual discretionary income, according to the Education Department.

If you don't have a job yet and your cash flow is negative, consider a deferment or forbearance. A deferment lets you put your loan on hold for up to three years. If you don't qualify for a deferment, a forbearance lets you temporarily suspend payments for up to one year. However, in this case, interest will still accrue.

In each case, borrowers must apply for permission to postpone payments.

Step 4: Set up autopay

If you can afford your payments, sign up for autopay. An automatic program will decrease your chances of missing a payment and may come with the added perk of a modest interest-rate deduction on your loan.

A stretch of on-time payments will also put you on the right track to building a favorable credit history.

"That can make a big difference when you apply for a car loan, credit card, lease, mortgage or even a job," said Boucher.

Step 5: Give your tab a cash boost

If you are feeling flush from monetary gifts at graduation or a starting bonus, consider beefing up your first few payments.

"If and when you can, make more than the minimum payment each month. You'll pay off your loan faster, and you'll pay less interest," Boucher said. Just make sure extra payments go toward unsubsidized loans first, then toward loans with the highest interest rate.

You should also specify that those extra funds get applied to the principal of the loan and not to future interest payments.

However, if you are just getting on your feet, don't forgo the chance to build an emergency fund or max out contributions to a 401(k) plan, either.

Step 6: See if your employer will chip in

More employers are offering student-loan repayment benefits to their workers, which can help recent grads pay down their debt.

About 8% of companies, including Aetna, Fidelity and PwC, now offer taxable contributions to help employees repay student loans, up from 4% three years ago, according to the Society for Human Resource Management's 2019 Employee Benefits survey.

If you are job hunting, give extra consideration to potential employers that do offer a student loan assistance program.

Step 7: Consider consolidating or refinancing

Once you have a steady job, a salary and a credit history, call a few lenders or talk to a financial advisor about your options.

If you have several different loans, you might consider consolidating them. Or you may be able to refinance at a lower interest rate. You could also choose to extend the terms beyond the standard 10 years to lower your monthly payments.

But weigh the options first. Consolidating or refinancing to a private loan will forgo the safety nets that come with a federal loan, including income-based repayment programs and loan forgiveness, for those who would qualify.

Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.

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What to do when student loan grace period ends

The following article is from U.S. News & World Report

November 7, 2019

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Students who rely on loans to pay for college may give little thought to the financial burden they've taken on until after graduation. But borrowers will quickly need to devise a plan for how to pay back student loans as their grace period comes to a close and repayment begins.

"They're thinking about graduating and looking for a job, and have kind of put off the idea of what they're going to owe until they leave," says Chris George, dean of admissions and financial aid at St. Olaf College in Minnesota.

Most students with federal loans will have about six months after graduation before repayment must begin. If a student graduated in the spring, his or her repayment would begin in the fall.

Here are steps that experts advise student loan borrowers take to get started:

  • Understand student loan grace periods
  • Know how much is owed
  • Contact the student loan servicer
  • Pick a repayment plan
  • Stick to a budget
  • Prioritize loan payments
  • Focus on the future

Understand Student Loan Grace Periods
Some student loans provide a grace period after students graduate, leave college or drop below half-time enrollment before they must begin repayment. The length of time of the grace period for most federal student loans is six months.

This period allows graduates time to obtain employment and make a plan for repayment.

But not all student loans provide a grace period. PLUS loans do not offer students a grace period; repayment must begin when the loan is fully disbursed.

Loans that do provide a six-month grace period include direct subsidized loans, direct unsubsidized loans and all Stafford loans, according to the Department of Education.

Borrowers who consolidate their loans forfeit their remaining grace period, and students who go back to school before the end of their grace period and enroll at least half-time will receive their six-month grace period when they stop attending or drop below half-time status. Borrowers who are called to active duty in the military for more than 30 days before the end of their grace period receive the full six-month grace period when they return from duty.

"Some private lenders offer grace periods as well," Abril Hunt, a training and outreach manager at ECMC, a student loan guarantor and financial literacy nonprofit, wrote in an email. "The length of the grace period will vary by lender and loan product, but it's usually about six months. Be sure to check your loan agreement to see what (if any) grace period you have."

If they are able, borrowers can make payments on their student loans while still in the grace period. Experts advise doing so, given that interest will accrue during the grace period for most federal student loans.

Know How Much Is Owed
If a borrower's loans have been building, a crucial first step is to know how much is owed. On the National Student Loan Data System, the Department of Education's database, students can locate all their federal loans and find debt totals, including accumulated interest.

"Before I looked online, I wasn't even sure how much my loans were, including interest," says Meghan Mitnick, a teacher in New York City who had six-figure loan debt from two New York University degrees. "Even though it's really scary, know exactly what you're dealing with."

Contact the Student Loan Servicer
Once borrowers have a good grasp of just how much is owed, they should then find out exactly who must be paid by contacting the correct student loan servicer.

"That's the question we get often: Who am I supposed to be paying?" George says.

Whether a student took out federal or private loans, the loan servicer is the first point of contact for any questions and address updates, so don't hesitate to reach out, recommends Erin Wolfe, associate director of financial aid at Bucknell University in Pennsylvania.

"The best advice for any graduate is to remain proactive in loan repayment," Wolfe wrote in an email. "If you have questions or concerns, contact the loan servicer without delay. Building a successful repayment strategy for student loan debt is essential for shaping the borrower's financial future."

Pick a Repayment Plan
The standard repayment plan for federal student loans is 10 years, but that doesn't necessarily make it the right option for every student.

For example, some borrowers of federal student loans may be better off opting into income-based repayment or income-contingent repayment plans, which adjust monthly bills according to pay.

Hunt says the most important thing to remember about repayment plans is that they can be changed.

"Borrowers are not stuck in the same repayment plan forever," Hunt wrote. "If they choose the wrong plan for their situation or have a sudden lifestyle change, they should contact their servicer to discuss options for delayed payment or how to change their repayment plan."

Stick to a Budget
Once borrowers determine a monthly obligation, they should keep track of other spending and bills. Budgeting websites like Mint.com have helped University of Pittsburgh graduate Shawn Norcross, a sales representative at Trex Co. who is in the process of repaying about $83,000 worth of student loans, he says.

"Budgeting is amazing, because whenever you can actually see it on a website or on your phone, you don't want to go over; you don't want to cheat," says Norcross, who compares financial tracking to counting calories. "It almost turns into a game of sorts where you want to win."

Prioritize Loan Payments
As students budget, they may find themselves forgoing activities or events to pay off their debt. For Norcross, his payments have taken precedence over major decisions as he plans to avoid default, he says.

"My student loans are affecting my life," Norcross says. He says he wanted to move to Washington, D.C., after college, but couldn't because of his financial situation. "My student loan payments are probably No. 1."

Prioritizing may also mean minimizing other forms of debt or, if possible, chipping away at student loans before tackling other types of debt.

"Student loans are one of the few debt obligations that are rarely forgiven in bankruptcy filings," notes Michael Scott, associate provost for enrollment management at Texas Christian University. "In a worst-case scenario, you will be better off if you've reduced non-dischargeable debt first."

Focus on the Future
Borrowers who are scrimping or sacrificing to make their monthly student loan payments may find it helpful to remind themselves what they're paying for.

"I really value the education I got, and I got a good job, so it paid off," Mitnick says.

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