College grads face the next hurdle: Paying off student loans

Nearly 55% of college borrowers regret the amount of debt they have incurred. (Matt Volz/AP)

Editor’s note: This column originally included information from a website called Student Loan Report and used quotes, emailed, from someone identified as Drew Cloud, the website’s founder. This week, the Chronicle of Higher Education reported that the cloud doesn’t exist and that the student loan report belongs to LendEDU, a for-profit student loan company. LendEDU chief executive Nate Matherson confirmed to The Washington Post that Cloud was a fictional character his company created and promoted as a student loan expert. He apologized for the deception and for not previously disclosing his company’s affiliation with the Student Loan Report. Citations attributed to Cloud and information from the Student Loans Report have been removed from this article.

After all their hard work, the college class of 2017 is finally enjoying the real world and all of its “perks,” including paying off their student loans.

The Federal Reserve Bank of New York’s latest report on household debt and credit found that outstanding student loan balances increased by $83 billion over the past year to $1.34 trillion. .

Borrowers don’t have to wait for the first installment to make sure they can manage the monthly payments. A good first step is to contact the company servicing their loan to discuss all of their repayment options and to ensure that their email and postal addresses are up to date. Many graduates don’t know the name of the company that handles their federal student loans.

The standard loan repayment plan is 10 years. This is essential as payments under the standard option may be too high for a new graduate’s budget. If so, they should consider an income-based repayment plan.

There are four income-based plans available for federal loans:

● Income Based Reimbursement Plan (IBR).

● Pay-as-you-go reimbursement plan (PAYE).

● Revised pay-as-you-go reimbursement plan (REPAYE).

● Income Contingent Reimbursement Plan (ICR).

You can learn more about the differences between the plans by going to

A report released last month by the Consumer Financial Protection Bureau found that borrowers enrolled in income-based plans have much lower default rates than those enrolled in other types of payment terms. . The CFPB said 9 in 10 high-risk borrowers weren’t enrolled in affordable federal repayment plans that allow them to pay based on their income. According to the report, the Department of Education estimates that more than 8 million federal student loan borrowers have gone at least 12 months without making the required monthly payment.

Here’s a sobering finding for co-signers: 20% of borrowers didn’t understand that their payment history could negatively impact their co-signers’ credit. Late payments show up on a co-signer’s credit history.

The New York Fed reported that 11% of student loans were at least 90 days past due or in default.

For some, federal loan consolidation might be a good idea. There is no application fee to merge multiple federal student loans into one. This is essential to know because there are private companies that, for a fee, offer to help people apply for a direct consolidation loan.

There is no need to pay for this fairly easy process.

Borrowers can apply online for a direct consolidation loan through

If you have any questions, contact the Loan Consolidation Information Call Center at 800-557-7392.

Nearly 28% of survey participants believed their loans could be canceled in the event of bankruptcy. The bar you have to cross to get your student loans forgiven is quite high: you have to prove that it is an undue hardship.

No wonder borrowers so often regret the debt they took on to go to college.

Write Singletary at The Washington Post, 1301 K St. NW, Washington, DC 20071 or Find out more at

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