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Learning Objectives

Students will be able to:

Discuss common mistakes made in repaying student loans
Explain the difference between different types of repayment plans
Identify sources of assistance if they need help with student loan repayment
Analyze different scenarios and choose the best repayment option

National Standards for Personal Financial Education

Managing Credit

4a: Describe the different sources of funding for postsecondary education
5a: Compare federal and private student loans based on interest rates, repayment rules, and other characteristics
5d: Predict the potential consequences of deferred payment of student loans

1

RESEARCH: What is the average amount of student debt for college graduates?

Your college graduation day has arrived! Do you have a plan to make sure your student loan repayment doesn’t put a damper on your celebration? We’ve moved to the final portion of the financial aid process roadmap. Read the box labeled “Repayment” to get an idea of where you are in the process. Then, answer the question.

1

What questions do you have right away about life after graduation and student loan repayment?

You’ve already learned about multiple types of federal student loans. To go along with those, there are also multiple types of repayment plans. Use the article to answer the first 3 questions on repayment plans. Then, watch the video to answer the last question on loan consolidation.

1

Identify whether the following statements describe a Fixed Payment or Income-Driven repayment plan.

Has a fixed or graduated monthly payment
Your monthly payment is based on how much money you make and your family size
After making a certain number of payments, the rest of your loan balances will be forgiven
Ensures you’ll pay off your loan (principal and interest) over a fixed period of time (10-30 years)

Fixed-Payment
Income-Driven

1

You’ve got your repayment plan ready to go…but then, something happens. Maybe you lost your job or suffered another kind of hardship that will keep you from being able to make your normal student loan payments. Watch the video to learn more about student loan deferment and forbearance. Then, answer the questions.

1

What function do both deferment and forbearance each serve?

1

What is the main difference between deferment and forbearance?

It can help to learn from the mistakes of others before you’re in a situation to make them yourself. Review the slides in this article to learn about some of the biggest mistakes student loan borrowers make. Then, answer the questions.

1

Choose one of the common mistakes mentioned in the article. Explain why it stood out to you and, if possible, describe how you would avoid it.

Is a standard repayment plan always the best way to go? As you’ve probably already figured out, it depends on several different factors. Let’s analyze a few different scenarios to see what kind of repayment options work for different situations. Follow the directions on the worksheet to complete this activity.

Set Up

Open the Loan Simulator.

Find the first option “I Want to Find the Best Student Loan Repayment Strategy” and click “Or Start From Scratch”
Click “I have a job or plan to get one soon” and “Continue”

1

Ideally, which repayment plan would you choose in order to pay the lowest total amount of interest?

Standard

Graduated

Extended

Income-driven

1

Consolidation your monthly payment and often means you will pay in interest over the life of your loan.

raises, less

raises, more

lowers, less

lowers, more

1

Which of the following statements about forbearance is true?

You don’t have to make monthly payments and interest does not accrue

You don’t have to make monthly payments but interest still accrues

You have to make regular monthly payments but interest does not accrue

You have to make regular monthly payments and interest accrues

6.0 Lesson 5: Student Loan Repayment

6.0 Lesson 5: Student Loan Repayment

Learning Objectives

Learning Objectives

RESEARCH: What is the average amount of student debt for college graduates?

What questions do you have right away about life after graduation and student loan repayment?

Identify whether the following statements describe a Fixed Payment or Income-Driven repayment plan.

What function do both deferment and forbearance each serve?

What is the main difference between deferment and forbearance?

Choose one of the common mistakes mentioned in the article. Explain why it stood out to you and, if possible, describe how you would avoid it.

Ideally, which repayment plan would you choose in order to pay the lowest total amount of interest?

Consolidation your monthly payment and often means you will pay in interest over the life of your loan.

Which of the following statements about forbearance is true?

Learning Objectives

Learning Objectives

RESEARCH: What is the average amount of student debt for college graduates?

What questions do you have right away about life after graduation and student loan repayment?

Identify whether the following statements describe a Fixed Payment or Income-Driven repayment plan.

Your friend tells you after doing all their research they’ve chosen the graduated repayment plan. What assumption are they making about their future income?

It might seem tempting to choose an income-driven repayment plan since the remaining balance is forgiven after 20-25 years. What are some drawbacks you can think of if you were to choose an income-driven plan when you could be making higher payments?

Consolidating multiple student loans into one payment can help by lowering your monthly payment. But what are the downsides?

What function do both deferment and forbearance each serve?

What is the main difference between deferment and forbearance?

Choose one of the common mistakes mentioned in the article. Explain why it stood out to you and, if possible, describe how you would avoid it.

Ideally, which repayment plan would you choose in order to pay the lowest total amount of interest?

Consolidation your monthly payment and often means you will pay in interest over the life of your loan.

Which of the following statements about forbearance is true?

Your friend tells you after doing all their research they’ve chosen the graduated repayment plan. What assumption are they making about their future income?

It might seem tempting to choose an income-driven repayment plan since the remaining balance is forgiven after 20-25 years. What are some drawbacks you can think of if you were to choose an income-driven plan when you could be making higher payments?

Consolidating multiple student loans into one payment can help by lowering your monthly payment. But what are the downsides?

6.0 Lesson 5: Student Loan Repayment

6.0 Lesson 5: Student Loan Repayment

Learning Objectives

Learning Objectives

RESEARCH: What is the average amount of student debt for college graduates?

What questions do you have right away about life after graduation and student loan repayment?

Identify whether the following statements describe a Fixed Payment or Income-Driven repayment plan.

What function do both deferment and forbearance each serve?

What is the main difference between deferment and forbearance?

Choose one of the common mistakes mentioned in the article. Explain why it stood out to you and, if possible, describe how you would avoid it.

Ideally, which repayment plan would you choose in order to pay the lowest total amount of interest?

Consolidation __________ your monthly payment and often means you will pay __________ in interest over the life of your loan.

Which of the following statements about forbearance is true?

Learning Objectives

Learning Objectives

RESEARCH: What is the average amount of student debt for college graduates?

What questions do you have right away about life after graduation and student loan repayment?

Identify whether the following statements describe a Fixed Payment or Income-Driven repayment plan.

Your friend tells you after doing all their research they’ve chosen the graduated repayment plan. What assumption are they making about their future income?

It might seem tempting to choose an income-driven repayment plan since the remaining balance is forgiven after 20-25 years. What are some drawbacks you can think of if you were to choose an income-driven plan when you could be making higher payments?

Consolidating multiple student loans into one payment can help by lowering your monthly payment. But what are the downsides?

What function do both deferment and forbearance each serve?

What is the main difference between deferment and forbearance?

Choose one of the common mistakes mentioned in the article. Explain why it stood out to you and, if possible, describe how you would avoid it.

Ideally, which repayment plan would you choose in order to pay the lowest total amount of interest?

Consolidation __________ your monthly payment and often means you will pay __________ in interest over the life of your loan.

Which of the following statements about forbearance is true?

Your friend tells you after doing all their research they’ve chosen the graduated repayment plan. What assumption are they making about their future income?

It might seem tempting to choose an income-driven repayment plan since the remaining balance is forgiven after 20-25 years. What are some drawbacks you can think of if you were to choose an income-driven plan when you could be making higher payments?

Consolidating multiple student loans into one payment can help by lowering your monthly payment. But what are the downsides?

Consolidation your monthly payment and often means you will pay in interest over the life of your loan.

Consolidation your monthly payment and often means you will pay in interest over the life of your loan.