TAMPA - Toward the end of his hourlong discussion of student loan repayment, Dameion Lovett eventually got to the subject "we'll tell you about, but we really don't want to talk about."
With so many options for repayment of student debt, and the consequences of default so severe, it's the one thing Lovett, a director with the Bull 2 Bull Financial Education Program, said should be avoided.
"What we don't want to do is to turn this over, to have it be collected from you," Lovett said. "It does affect your credit. If you default on your loan, they will come and take it out of your paycheck. They'll garnish your wages, garnish your income tax return. You don't want to have this happen."
The University of South Florida's Scholarships and Financial Aid Services Department is targeting graduating seniors in its first Bull 2 Bull program to help them make good decisions on the debt they've accrued during their years on campus. The average USF student graduates with about $22,000 in debt, which would result in a monthly payment of $253 under the standard 10-year repayment plan.
But there are alternative payback plans, and that was the subject of seminars on Monday, at 11:45 a.m. today and 4:45 p.m. Wednesday and Thursday in the Chamber at the Marshall Student Center.
One of the first things participants see is a summary of their personal debt situation. "Just seeing your own information, you start to internalize: 'This is how much I owe, this is how much I have to pay,'?" said Martine Koné, another Bull 2 Bull director. "At least it gives them an idea."
Then, students are led through alternatives to the standard repayment plan.
A graduated repayment plan features lower payments at first, with the amount increasing, usually every two years. An extended plan can stretch payments out up to 25 years; the payments will be lower, but the student winds up paying more over time.
There are income-based plans that can limit the payment to 10 percent to 15 percent of discretionary income; that would lower the standard payment on $30,000 in debt from $288 to as little as $156 for students in financial hardship.
There are forbearance, deferment and consolidation options that can also help keep students on solid financial footing.
"I thought it was really important," said Tena Saji, a senior in public health who could benefit from a deferment if she follows her plan to work for a while, then attend graduate school for health administration. "I wasn't aware of all these payment options. I know what my options are, and it's more comforting knowing that I have these available to me."
The default rate on student loans at USF was 9.9 percent for 2009 graduates. Nationally, the rate was 8.8 percent. Universities with high default rates can face sanctions from federal loan programs.
"That's why a lot of schools are implementing financial literacy programs," Koné said. "It's our hope that if we educate them on how to borrow wisely, and budget and help them with financial tools, they'll be able to minimize their debt and at least be more financially responsible."
Managing debt wisely
Pay more if you can afford it each month.
Auto-debit your monthly payment: You'll never forget to make the payment, and can get an interest rate reduction
Keep in contact with your loan servicer; it's their job to help guide you through the process