By Layden Hale and Isabel Giles
Ohio’s college graduates this spring have heard from and been challenged by an impressive array of speakers -- leaders in health, cable television, and fast food, to name a few.
"Expect the unexpected,” “You have to change to keep growing,” “Lead and achieve greatness,” graduates of colleges, large and small, have been told.
But if there is one consistent message that most graduates need to take with them, it might be: “Visit your student financial aid office and find out the terms of the loans that got you to this point.”
While the upside of a college degree is potential employment, your student loan debt, particularly if you fall behind on payments and go into default, can adversely affect your future ability to borrow money to purchase a home.
For example, to quality for an FHA loan – the most common for home buying -- you are required to show a dozen straight loan payments on your student loan.
And it’s more than just a house that is at stake. Employers searching backgrounds may hold a student loan default against you. Some licensed professionals can be suspended if delinquent on their college loans.
This issue and the impact is huge:
· 70 percent of college graduates are graduating with student loan debt.
· 25 percent of individuals with student loan debt are in default.
Upon leaving college, find out the source of your financial aid. College financial aid offices should be more than happy to advise you, as the loans they coordinate are monitored for success. If loans dry up, that means fewer student admissions -- the lifeblood of any college or university.
You should also know that government backed student loans do not have immediate payments -- but private ones do. If you have a government loan, develop a strategy to reduce the monthly payment and when it comes due.
Hope is not an option. You need a repayment plan. Develop it before you hit default.
At Homeport, we can help individuals develop an overall budget. Once that budget is established we can help you develop a repayment plan for debts and an action plan that could one day help you purchase a home or meet other financial goals.
Congratulations graduating class of 2016.
(Layden Hale is a Senior Counselor Advisor for Homeport; Isabel Giles is Loan Program Manager for Homeport. Visit www.homeportohio.org/get-help, or call 614 221-8889, Ext. 134, for free financial counseling advice.)