November and December not only mark the start of the holiday season, they also mean recent college graduate’s budgets will get a little thinner.

Most graduates in the class of 2012 will begin making their first student loan payments. November signals the end of the six-month post-graduation grace period graduates get before repayment begins.

Of the 20 million students who attend college each year, more than 12 million borrow money, mostly in the form of federal and private student loans.

That debt is adding up.

According to data from the Federal Consumer Finance Protection Bureau, there is roughly $1 trillion of outstanding student loan debt in the United States today. For the first quarter of 2012, the average student loan balance for all age groups was more than $24,301, according to the most recent data from the Federal Reserve Bank of New York.

Students who take out those loans are expected to pay back that money with interest, but a tough job market has made it increasingly difficult for some, forcing them to put off making payments.

“When I went back to school, nobody had any idea that the job market would tank so bad,” said Sarah Erickson, a Harker Heights resident who graduated from Kaplan University in 2010. “It’s been tough finding work, and figuring out how to make sure I can pay (the loans) back.”

Erickson, who earned a bachelor’s degree in science and psychology, said she had to take out roughly $46,000 in student loans. While she was initially supposed to begin making payments in December 2010, the poor job market forced her to seek a deferment.

Erickson was granted an unemployment deferment, something she has to renew every six months. While that has granted her some relief, the deferment maxes out at 36 months, and any un-subsidized federal loans continue to accrue interest, pushing the total amount she owes closer to $50,000.

“After December 2013, the deferment will be over,” Erickson said. “I’ll be looking at a payment of about $444 a month.”

Erickson’s situation is not uncommon. Of the 37 million borrowers with outstanding loans, 5.4 million have at least one account past due.

Patricia Nash Christel, a spokesperson for loan giant Sallie Mae, said the company is offering current students and graduates a number of options to help make payments manageable and keep them from defaulting.

“The bottom line is that any payment is better than not paying at all,” Christel said. “Defaulting on a loan can impact your credit, and effect future loans for things like housing and vehicles.”

Payment alternatives

Christel said Sallie Mae offers a number of payment alternatives, including income-based payment plans and, in some cases, being able to extend the life of the loan and lower the payment.

“In other cases, you can postpone the payment altogether for a period of time,” she said.

Christel advised anyone considering those options to carefully consider the pros and cons of each one before making a decision, as some deferments and plans accrue interest or have other terms.

“Make sure you have a plan to pay not just for one year, but for the whole degree plan,” Christel said. “While you are in school, don’t borrow more than you need to, because every dollar you don’t borrow is a dollar, with interest, you don’t need to repay later.”

Many student loans also come with no penalties for early payments, and some will allow students to make payments as low $25 a month while they’re in school.

“It’s a great way to pay down some of that loan balance or the interest, and lower those payments when you get out of school,” she said.

While looming payments may be daunting for graduates, Erickson said she doesn’t regret taking out the loans to get a degree. She said the problem isn’t the amount of the loans, but the stagnant job market.

“If I had known what I knew now, I would have still taken out the loans,” Erickson said. “But I maybe would have considered a different major.”

Contact Chris McGuinness at or (254) 501-7568. Follow him on Twitter at ChrismKDH.

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