Tips For Paying Back Student Loans

Not too long ago a study was done about college students and what they face in terms of debt after graduation. According to Mathew Greenwald Associates study college graduates put off buying houses, having children, getting needed health care and at least 32% of them end up moving in with family. With a burden of debt of $25,000, there isn’t much of a choice for most graduates, or is there? There are a lot of options for paying back student loans, but many graduates don’t realize it.

Normal student loans are deferred until a student graduates and this includes graduate school. After a period of time, usually six to nine months, the student begins paying back student loan types. As loans are taken out during the course of four to eight years, most of them come from various vendors. By the time a student graduates, they can have as many as eight different lenders. Eight different lenders, $25,000 of debt can be a lot to wade through. It’s important to learn all the ways you can get help paying back student loans.

student loans

Begin by getting all the information about your loans. To do this you should make a list of each lender, the total amount and the interest on the loan. Be sure to separate private loans from federal loans as they cannot be consolidated together. Once you have all this information you can look into all the options you may have to pay back student loans.

Learn all your options for repayment. Federal loans in the USA can be paid back in various ways, according to Sallie Mae (the USA’s leading loan corporation). There is the standard repayment, extended repayment, graduated repayment, income sensitive repayment and the income based repayment. Each one of those has it’s benefits and disadvantages. Standard repayment is the best option in the long term if you can afford the monthly payments. The monthly payments and interest are exactly the same through the life of the loan. Graduated repayment is better for those who can count on getting a job within the first year. The monthly payments begin slowly and then get higher through the life of the loan. Income sensitive or based repayments are based on a percentage of your income or financial hardship. Standard repayment is what most students choose, however it’s only benefit is saving money in the length of the repayment. The other terms of repayment will end up costing more, but the monthly payments will be manageable.

The last option for repayment, which works only with federal loans and non Parent Plus loans, is consolidation. Consolidation makes it easy to make one payment and use one of the repayment options as mentioned above. Consolidation also offers the longest terms for repayment, meaning the monthly payments can be extended for approximately 20 years. Usually the monthly payments are around $300, but with an extended period the monthly payments can be as low as $125, depending on the interest rate. Lastly, consolidation allows a borrower to pick teh very best interest rate for the life of their loan.

Get the facts about repaying your student loan and the best options for repayment.

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