For Release: 11/2/2006
Contact: Eric Solomon, 202.659.2258
Lincoln, Neb., November 2, 2006 – A new survey of 4,100 college graduates finds that 52 percent are in a good position to start making student loan payments, because they are either financially prepared or are establishing a monthly budget. This is counterintuitive to data released by the College Board on October 24 showing that tuition rose 35 percent this past year for public universities while Federal Pell Grant dollars declined by $900 million.
The survey was conducted by Nelnet, an education planning and financing company.
This year's college graduates with Federal Stafford loans will make their first payments in November, after a six-month grace period. Approximately 9.4 million U.S. undergraduates have Stafford loans.
"Although many college graduates said they are in a good position to begin making payments on their student loans, others are very concerned," observed Eric Solomon, a Nelnet spokesperson. "College graduates who are not sure how they will afford their monthly student loan payments should contact their lenders to learn about repayment options and to see if student loan consolidation is right for them. There are many options available to help recent graduates repay their loans."
According to the Nelnet survey, 14 percent of graduates actually contacted their lender to discuss their financial situations.
Solomon believes that recent college graduates need to learn about available options for paying their Federal Stafford loans:
Standard Repayment requires borrowers to pay a set monthly amount (with a minimum of at least $50) for up to a maximum of 10 years. However, this set amount may be adjusted due to changes in the interest rate or loan balance.
Income Sensitive Repayment ties the payment amount to the borrower's monthly gross income. The payment amount is adjusted annually. The maximum repayment period is 10 years; however, this period may be extended up to five additional years.
Graduated Repayment begins with smaller monthly payments that subsequently increase. The maximum repayment period is 10 years. The amount of the loan determines how often and by how much payments increase.
Extended Repayment allows for repayment over a period of up to 25 years. The loan may be repaid under a standard or graduated schedule. To qualify for this repayment plan, the borrower must meet certain eligibility criteria.
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About Nelnet
For 28 years, Nelnet has been helping education-seeking families plan for their education, pay for their education, and prepare for their careers. The company has invested hundreds of millions of dollars in products, services, and technology improvements for students and the educational institutions they attend. These services include live counseling to guide families through all aspects of the financial aid process, benefits for borrowers, including tens of millions of dollars in fee reductions, and Nelnet-sponsored scholarships. Nelnet serves students in 50 states, employs approximately 3,700 associates, and has $22.9 billion in net student loan assets.
Additional information is available at www.nelnet.com.
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