PHEAA Reminds Recent College Graduates to Prepare for Student Loan Repayment

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Spring graduates are approaching the end of their 6 month grace period

Harrisburg, PA (November 12, 2014)—The Pennsylvania Higher Education Assistance Agency (PHEAA) is advising federal student loan borrowers who graduated in May or June that the 6 month grace period on their student loan is soon ending and that repayment will begin.

New graduates typically take advantage of their 6 month grace period to find employment and to get their finances in order before beginning repayment of their student loans.

"A variety of convenient and flexible repayment plans are available to federal student loan borrowers - including a Pay as You Earn Repayment Plan," said Representative William Adolph, PHEAA Board Chairman. "If anyone is concerned about whether they will be able to make their student loan payment, the best thing that they can do is to contact their servicer for help or they could fall behind and risk default."

Federal student loan repayment plans offer borrowers many benefits, such as Graduated Repayment with payments that are initially lower but increase later, or Income-Based Repayment with monthly payments based on loan debt, income and the number of people in their household.

"The first and most important step toward successful repayment is to fully understand your options and obligations," said Senator Wayne D. Fontana, PHEAA Board Vice Chairman. "After achieving awareness comes the need for action. Set up a repayment plan that you can reasonably manage to help establish a solid financial footing that can last a lifetime."

Borrowers who are having difficulty securing employment, or who have recently lost their job, should contact their servicer to determine if they could qualify for a reduced payment plan or are eligible for an economic hardship or unemployment deferment or forbearance which could temporarily suspend their payments until their situation improves. Interest continues to accrue on federal student loans even if a deferment or forbearance suspends monthly payments. The only exceptions are on Subsidized Direct Stafford Loans and Subsidized Consolidation Loans on which the federal government pays the interest during periods of deferment.

PHEAA conducts its student loan servicing activities as FedLoan Servicing and American Education Services (AES). Secure online access to and provides additional information on available repayment plans, allows customers to submit secure online payments, and offers an Eligibility Quiz to help borrowers learn which deferment or forbearance options may best suit their current circumstances.

Borrowers are also encouraged to take advantage of other free online resources, such as, which offers college graduates and soon-to-be graduates helpful information on financial planning and budgeting, managing student loan debt, and establishing good credit habits.

PHEAA offers additional tips to graduates during their repayment period:

  • Set a reasonable budget and stick to it.
  • Avoid credit card debt and high interest rates.
  • Enroll in an automatic debit program. Most borrowers can save an additional .25 percent interest rate when loan payments are automatically debited from a savings or checking account.
  • Make payments online; borrowers are encouraged to manage their student loan on the secure borrower portal found on and
  • Make payments on time and never skip a payment. By missing payments, borrowers can ruin their credit score, which can impact their financial future for years.

Federal student loan borrowers should also determine if they are eligible for student loan forgiveness, such as through the Public Service Loan Forgiveness Program. This program is available to eligible borrowers who work full-time in public service jobs after 120 consecutive on-time, full, scheduled, monthly payments on a qualifying repayment plan. Borrowers who are joining or have already joined the military are reminded to take advantage of options available for service members. For more information and eligibility requirements, visit

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