ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, August 27, 1996 TAG: 9608280083
SECTION: WELCOME STUDENTS PAGE: 65 EDITION: NEW RIVER VALLEY
DATELINE: BLACKSBURG
SOURCE: ADRIANNE BEE STAFF WRITER
Each May and December, several thousand eager students graduate from Virginia Tech and Radford University - ready to hit the world and land a real job.
Aside from the relief of surviving final exams and having a diploma in hand, many of these grads will soon face the financial anxiety that living expenses, credit cards and student loans can bring.
Paying off a student loan is no small matter these days. The average loan for a Tech undergraduate is now $12,000 and repayment can be stretched over 15 years, according to campus financial aid officials and federal guidelines.
Although most students have to start repaying their loans at the end of a six-month grace period after graduation, some defer repayment to continue their education.
Kendra Guiffre received her master's degree in architecture from Tech in December 1993 and interned at an architecture firm in Roanoke. Her deadline to start paying back her student loan was pushed back two years because she was working toward a professional residency in architecture. Her husband, Chris, also deferred his undergraduate student loans while he was a graduate assistant and full-time student in business at Tech.
Many graduates, however, will find the responsibility of paying back their student loans beginning with their first job. And that repayment can take a bit out of their monthly paycheck. A student with a $15,000 loan, for instance, would have a monthly payment of $178, according to federal guidelines.
Before seniors graduate, Tech sends them a record of their student loans. "Frequently, it's the first time they've seen the total, and it's a pretty overwhelming experience," said Julie Sina,director of financial aid at Virginia Tech:
The school also gives the students some simple advice at an exit interview to review their loan responsibilities. That advice?
Stay in close contact with your lender.
Don't get behind.
Before you default, renegotiate.
The key for ex-students, says Alexis Ellison with First Union in Charlotte , is communication. Most lenders will work with recent graduates in arranging a payback schedule, but they need to know the person's situation. "If you're still unemployed six months after graduation, it's wise to contact your lender."
Deferment plans are available, Ellison says. "Don't ignore the letters they send you. It's best to address the situation right away."
For students who decide that first job is a ticket for big spending, competing debts can quickly pile on top of a student loan. One of the easiest temptations and biggest risks is the ever-present credit card.
"Avoid credit cards. Save first. Spend late. The more investments you can start on when you're young, the better," advises Tony Mullins, a financial planning consultant at Capital Solutions Group in Radford. "I just sold a 25-year-old an IRA this morning and told him he'd be thanking me in 40 years."
If you do get plastic, use it wisely, say banking and financial advisers.
"Keep tabs on your current credit status. Pay any kind of credit on time," says Ellison .
For some graduates, though, that first credit card might be hard to obtain if they grew careless in college and developed a bad habit of bouncing checks. Those juggling student loans especially have to be cautious about how living expenses can increase the burden. An expensive new car, rent at a popular apartment complex, new furniture bought on credit - these seeming essentials can quickly mire a college graduate in financial trouble.
"We have one combined income, it's fairly modest," Guiffre says. Perhaps their best decision was to stay in Blacksburg where they have continued their relatively modest student lifestyle. "It helps a lot. We have friends working in the D.C. area and know what they're going through. One thing that keeps us sane is the rent in Blacksburg. It's pretty reasonable."
The U.S. Department of Education has a new pamphlet that explains how to consolidate loans or lower interest rates. For a free copy of "Federal Direct Consolidation Loan Program," write to: Consumer Information Center, Dept. 48, Pueblo, Colo. 81009.
LENGTH: Medium: 82 linesby CNB