Loan changes for new graduates

Graduates don't have to fear being handed a bill with their diploma; most federal loans come with a six-month grace period.

But interest continues accruing during that time, so the sooner repayment starts the better.

The exception is with subsidized federal loans, in which the government waives interest charges until the loan comes due.

The standard payment option spans 10 years, but there's no penalty for paying off debt earlier. Of course, that's probably not an issue for those carrying huge debt loads.

Those pursuing fields that don't pay a lot will want to look into a program for income-based repayment, or IBR. The option was introduced last summer to help make debt more manageable.

Essentially, it caps payments at 15 percent above any earnings beyond about $16,000. Any debt remaining after 25 years is forgiven.

Eligibility depends on a formula that weighs education loan debt against income. A calculator at IBRInfo.org can help determine whether borrowers qualify.

Those in both the direct and Federal Family Education Loan programs can apply.

A new law that overhauled the federal lending program makes IBR even more favorable, in part by capping payments at 10 percent of income. But the changes don't go into effect until 2014 and will apply only to new borrowers.