PHEAA Encourages New College Graduates to Prepare Now for Managing Student Debt

Plan wisely as millions of new graduates are entering the workforce

Harrisburg, PA (May 18, 2017)—The Pennsylvania Higher Education Assistance Agency (PHEAA) is urging graduating college students to prepare themselves for life after graduation. This is best accomplished by working to secure employment, developing a manageable budget, and, for student loan borrowers, researching available repayment options.

"Establishing a reasonable financial plan is one of the most important things that a new graduate can do as they prepare to enter the workforce," said Representative Mike Peifer, PHEAA Board Chairman. "Graduates should do their research and learn about the benefits of different repayment options, including income-driven plans which can be individually matched to a borrower's ability to make monthly payments."

Federal student loan borrowers can take advantage of the 6-month grace period following graduation before their monthly loan payments begin. This allows time to find employment and to choose a repayment plan that best meets their needs. However, if your loans are accruing interest during this period, it will capitalize, which adds to the principal of the loan. While it is not required, any payments made during the grace period will lower that amount and save money.

For borrowers who are unable to make their scheduled monthly payments, deferment and forbearance may be available. Deferments and forbearances are periods during which a student's lender may temporarily suspend or reduce loan payments. Borrowers should contact their 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.

"Help is available for borrowers who are falling behind on their payments and risking default," said Senator Wayne D. Fontana, PHEAA Board Vice Chairman. "Not dealing with repayment challenges can make a bad situation worse. Borrowers should reach out to their loan servicer at the first sign of trouble to identify a manageable repayment plan and to explore their options for debt relief."

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 6-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, may best suit their situation by contacting their loan servicer.
  • Some borrowers may qualify for federal loan forgiveness programs - explore these options by visiting
  • Take advantage of an automatic direct debit plan to make federal student loan payments. Borrowers will never miss a payment and will typically qualify for a 0.25% interest rate reduction just for participating.
  • Limit credit card spending to avoid unmanageable or excessive debt levels.
  • Establish a reasonable monthly budget and stick to it.
  • Maintain a favorable credit score by making payments on time.
  • Notify their lender and loan servicer of any changes to address or phone number.
  • If they are having any difficulty repaying a federal student loan, borrowers should remember that options are available for relief, such as deferment or forbearance.

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 and unique to each loan.

Graduates should also be wary of unsolicited offers of student loan debt relief that sound too good to be true - 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 their loan servicer to learn what options are available and receive free 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.

For more information, students and families are encouraged to visit PHEAA on Facebook, at, where they can view videos offering advice on a variety of topics related to higher education planning and student debt management.