PHEAA Encourages New College Graduates to Prepare Now for Loan Repayment

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Plan wisely as 3.5 million new graduates are entering the nation's workforce

Harrisburg, PA (May 28, 2015)—The Pennsylvania Higher Education Assistance Agency (PHEAA) is urging graduating college students to begin making plans for life after graduation by working to secure employment, developing a manageable budget, and researching available student loan repayment options while being wary of misleading or fraudulent debt relief offers.

Federal student loan borrowers can take advantage of the 6-month grace period following graduation before their monthly loan payments begin - allowing them time to find employment and choose a repayment plan that best meets their needs.

"Establishing a solid financial plan is one of the most important things a new graduate can do as they enter the workforce," said Representative William Adolph, PHEAA Board Chairman. "Graduates should do their research and become well informed about their different repayment options - such as income-driven plans - which are individually matched to a borrower's unique financial situation."

For borrowers who are unable to make their monthly payments, student loan deferment and forbearance may be available. Deferments and forbearances are periods of time during which a student's lender may temporarily suspend or reduce regular loan payments. Borrowers should contact their loan servicer to discuss their options for relief as soon as they realize that they may have difficulty making payments. Students who do not know who services their loans should visit to identify contact information for their servicer.

"Falling behind on payments and defaulting on student loans can have serious, long-term consequences - making a bad situation worse," said Senator Wayne D. Fontana, PHEAA Board Vice Chairman. "To avoid serious problems, borrowers should address repayment issues quickly by working directly with their student loan servicer to identify a manageable repayment plan."

PHEAA recommends that new graduates who are in their 6-month grace period:

  • Keep track of the date that their first student loan payment is due to avoid late fees. The six-month grace period begins when a student ceases to be enrolled on at least a half-time basis (typically less than six credits).
  • Consider which repayment option, including income-driven repayment plans that may best suit their situation by contacting their loan servicer. Some borrowers may qualify for federal loan forgiveness programs.
  • Take advantage of an automatic direct debit plan to make federal student loan payments. You will never miss a payment and will typically qualify for a .25% interest rate reduction just for participating.
  • Limit credit card spending to avoid unmanageable debt levels.
  • Set a monthly budget and stick to it.
  • Maintain a favorable credit score by making payments on time.
  • Enroll in automatic debit program to make sure payments are made on time and to avoid late fees.
  • Notify their lender and loan servicer of any changes to address or phone number.

Borrowers who have questions concerning their private loans should contact their financial aid administrator, lender or loan servicer. Private student loans typically have repayment and debt relief options that are different than federal student loans.

Graduates should also be wary of any company offering student loan debt relief, such as loan consolidation, loan cancellation, loan forgiveness, or defaulted loan assistance.

These companies typically charge up-front fees regardless of the borrower's actual eligibility for programs and services that are readily available for free from the federal government. Before paying for any assistance related to student loan management or debt relief, borrowers should contact the servicer of their loans to learn what options are available and receive assistance in determining which option is best for them.

PHEAA also encourages graduates to visit, their free debt management website, for information on developing a budget and student loan repayment options, including loan forgiveness programs.

Students and families are encouraged to visit PHEAA on Facebook, at, where they can view videos offering advice and direction on a variety of topics related to higher education.