When you set out to pay your student loan debt, it is important to consider a few things. Make sure you read all of the college student loan information that you can find.
This college student loan information is meant to help students understand their financial responsibilities and manage their financial affairs in the right manner. While moving out of college the last thing a student wants to think about is how the heck they are going to get the money to pay their huge student loan debt.
As a student borrower you are saddled with certain responsibilities just as you complete negotiating your loan. To maintain a good standing with the lender loan obligations need to be fulfilled diligently. Even one missed payment is an indication of delinquency to the people who may be reviewing your loan applications. This will cause huge problems when you are ready for a home or a new car in the years to come.
There can be circumstances where it may become genuinely difficult for you to make timely repayments. In such a situation you need to get in touch with your lender immediately. There are many ways in which you may get payment relief.
In many cases you may not be required to make repayments untill you graduate. The problem is that even after graduation there are many students who may not find suitable placement within the grace period. In other cases even a secured job may initially not pay enough to meet loan obligations along with covering other necessary expenses, which may lead to loan repayment issues. Keeping this in mind there is usually a six month grace period before the repayment schedule kicks in after your graduation.
You need to choose one from a number of strategies available that may help you in repaying your student loan. Nearly all lenders and service providers offer several options by way of different repayment plans and you should check with your lender about the availability of plans. A few of them are discussed below.
Graduated repayment – In this a long term repayment plan option spread over 12 to 30 years based on the total amount borrowed. For example, loans below $7,500 can be extended up to 10 years, $7,501 to $9,999 up to 12 years and so on, with 30 years repayment period for loans of $60,000 and above. You begin by making smaller repayments which gradually increase every two years. Under this option the monthly repayment cannot be less than 50% or above 150% the installment payable under the standard repayment option. It should also be equal to at least the interest amount payable subject to a minimum of $25.
Standard repayment – Standard repayment- For Federal Stafford and Federal PLUS loans the standard repayment schedule is structured over a period up to 10 years with the rate of interest calculated at 8.25%.The minimum monthly repayment installment for both loan types is $50 per month.
Extended repayments – In extended repayments you need to make smaller monthly repayments over a longer repayment period that can extend from 12 to 30 years depending on the amount borrowed. However, the total interest paid over the life of the loan is much higher. For example, if you borrow $20,000 @ 6.8% interest the effect of switching from standard repayment to extended repayment would be:
|Type of option||Installment per month||Interest amount payable|
|Standard repayment 10yr||$230.15||$ 7,619.30|
|Extended repayment 20yr||$152.65||$16,639.72|
|Difference||$ 77.50 (reduction)||$ 9020.42 (increase)|
Income sensitive repayment – This is applicable to a certain class of borrowers and takes into account a specific percentage of the borrower’s income to calculate the monthly repayment.
Loan consolidation – This helps pay student loan debt because it provides the facility of consolidating many types of loans into a single loan with just one repayment to be made on a monthly basis on a low rate of interest.
Prepayment option – This option cay help you pay student loan debt because it offers a very good opportunity for reducing the overall cost of the loan. Most private student loans incorporate terms that allow you to payoff a part of your loan before the scheduled repayment begins. This can be done at any time during the life of the loan.
Additionally, if you are paying off a government student loan, there may be certain programs offered by your state that can reduce or even cancel your loan altogether if you are performing certain services that include teaching and nursing. You can verify the availability of such programs by checking with the state agency for post secondary education of your state.
All of this college student loan information can help you to pay your student loan debt off that much faster.
If you’re already finished school, and looking for information on how to pay off your student loan fast, take a look at “How I paid my $20,000 student loan in 2 years“.