Tuesday, October 26, 2010

Sallie Mae Offers Advice to Help New College Grads Get an A+ in Student Loan Repayment

(BUSINESS WIRE)--While many new college graduates have already paid their first few months’ rent on a new apartment, deposited their first few paychecks from a new job, signed up to save in a 401(k), now comes time for another step in their adult financial life: paying back their student loan. Sallie Mae, the nation’s leading saving, planning, and paying for college company advises customers on responsible student loan management habits.

“Student loans offer payment flexibility, and our goal is to help our customers not only be successful in academia but after school as well.”

“Because of the loans I was granted from Sallie Mae, I graduated magna cum laude from New York University,” says Andi Dyal, now owner of a successful Miami-based events firm, ANJE Soirees. “At first I could only afford a small amount a month, but increased my payment significantly with each pay raise, new job and other financial opportunities that came my way. I am expecting my first child this January and wanted to make sure my college debts were paid off before I started saving for her college future.”

According to the College Board, two-thirds of bachelor’s degree recipients take out an average of $20,000 in student loans. A loan balance of this amount translates into an estimated monthly student loan payment of approximately $270.

“We are here to educate our customers on all options available to make their student loan payments better fit their budgets,” says William A. Smith Jr., customer service supervisor at Sallie Mae. “Student loans offer payment flexibility, and our goal is to help our customers not only be successful in academia but after school as well.”

Experts at Sallie Mae offer customers these tips for successfully paying student loans:

* Mark your calendar. Note when your new principal and interest payment begins—usually six months after graduation for both federal and private education loans. If you have a Sallie Mae Smart Option Student Loan, the good news is that you’ve already been making monthly interest payments while in school, and as a result, you graduated with significantly lower debt than if you had let accruing interest build up while in school. Plus, you’ve already established the habit of making monthly payments. If you want to change the day of the month your payment is due, send a message from your account at SallieMae.com or call Sallie Mae at (888) 272-5543.
* Budget for success. Financial experts advise that your total monthly debt to income ratio, including payments for student loans, credit cards, car loans, and housing—whether renting or buying—should be no more than 36 to 40 percent of your monthly gross income. If needed, consider how to cut back your other expenses or reach out to your student loan servicer to discuss another payment plan.
* Choose your payment plan. New graduates often have the option of arranging regular monthly payments or minimizing payments initially as they establish their careers. Sallie Mae’s repayment calculator can help you evaluate different payment plans. For example, federal student loans offer an income-based repayment plan, which can cap student loan payments at 15 percent of discretionary income. Different loans have different options, including some with loan forgiveness programs, so it’s important to call your loan servicer to explore the best option for you.
* Sign up for automatic debit. Enroll in automatic debit to help avoid late fees and save yourself the hassle of scrambling for stamps. Even better: Sallie Mae customers may qualify for an interest rate reduction depending on their loan type and disbursement date. For example, on loans of $20,000, a .25 percentage point lower rate could save as much as $500 over 10 years. Surprisingly, less than 20 percent of Sallie Mae customers who recently began loan repayment use automatic debit—don’t be one of them who misses out on the convenience and the possible savings.
* Sign up for Upromise to help pay off faster. Sallie Mae’s Upromise rewards service may help you pay off your student loans faster. Every time you make a qualifying purchase from hundreds of participating companies you can earn a percentage back in rewards that can be used to help pay down your student loan. For example, a freshman who borrowed student loans each year and earned $100 a year in rewards throughout college and during loan repayment could have reduced his student loan balance by nearly $2,000. Visit www.SallieMae.com/upromise to learn more about how to join.
* Reach out if you’re experiencing difficulty. Sallie Mae works with its customers to avoid default by offering options to lower monthly payments or even enabling customers to take a temporary break from payments.

Sallie Mae offers loan repayment tips via Twitter @SallieMae and Facebook at facebook.com/SallieMae.

SLM Corporation (NYSE:SLM), commonly known as Sallie Mae, is the nation’s leading saving, planning and paying for education company. Sallie Mae’s saving programs, planning resources and financing options have helped more than 31 million people make the investment in higher education. The company services $202 billion in education loans and serves 10 million student and parent customers. Its affiliate Upromise Investments, Inc., manages $27 billion in 529 college savings plans, and members of Upromise by Sallie Mae have earned more than $575 million in rewards to help pay for college. Sallie Mae offers services to a range of institutional clients, including colleges and universities, student loan guarantors and state and federal agencies. More information is available at www.SallieMae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

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