PHEAA encourages new grads to prepare for debt


Last updated 5/30/2016 at 5:46pm

The Pennsylvania Higher Education Assistance Agency (PHEAA) is urging graduating college students to prepare 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. This allows time for graduates to find employment and to choose a repayment plan that best meets their needs.

“Establishing a reasonable 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 different repayment options - such as income-driven plans - which are individually matched to a borrower’s ability to make payments.”

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 these problems, borrowers should address repayment issues quickly by working directly with their loan servicer to identify a manageable repayment plan.”

PHEAA recommends 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, may best suit their situation by contacting their loan servicer. Some borrowers may qualify for federal loan forgiveness programs – explore these options.

Take advantage of an automatic direct debit plan to make federal student loan payments. They will never miss a payment and will typically qualify for a .25 percent 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.

Don’t panic. If they are having difficulty repaying a federal student loan, they should remember 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.

Graduates should also be wary of unsolicited offers of student loan debt relief that sounds 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 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.

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.


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