AMHERST, Mass. (WWLP) – College graduation is right around the corner, and finding a job is the first thing on many graduates’ minds. But others are even more concerned about paying back thousands of dollars in student loans.
Right now, student loan debt is $1.1 trillion in total – that’s the highest it’s ever been in the United States. According to a new report, Massachusetts ranked 14th in the country for the highest amount of student debt.
The average undergraduate who had to borrow money is expected to graduate with nearly $30,000 in debt. Students who went to college in Massachusetts and borrowed money will average $28,565 in debt.
Across the country, 20% of student borrowers are in default. A crisis that isn’t just bad for students, it’s also bad for the economy. Many graduates can’t buy a home, save for retirement, or start a family because of debt.
When it comes time to pay that money back, experts say you should know and understand your grace period. A grace period is how long you can wait before making your first payment, which is six months for federal Stafford loans, and nine months for federal Perkins loans.
When your federal loan payments kick in, they’ll automatically be based on a standard 10-year repayment plan. However, grads can also apply to extend their repayment period beyond 10 years, which will lower their monthly payments, but will also end up costing more in interest.
You can also check out income-based repayment or pay-as-you-earn plans. Those options cap your monthly payments based on your income. When applying for this option, graduates should always have a backup plan in mind, just in case they get rejected.