student loan repaymentA student loan can provide needed resources for college. Most students aren’t born with a silver spoon in their mouths and they need financial aid. A student loan can help pay college tuition, rooming and board, books and other educational expenses. However, unlike scholarships and grant programs, a student loan is not free money — it is repaid to the lending source, and student loan repayment typically begins six months after graduation.

Maybe you’ve heard horror stories of people finishing college with $30,000 or more in student loan debt. The idea of paying off this amount of debt shortly after school can be scary, especially with monthly payments of $300 or $400 a month. Fortunately, however, several provisions help keep federal student loan repayment affordable. A federal student loan calculator can help you estimate your monthly payment based on your balance upon graduation.

Student Loan Repayment Programs

If your student loan is funded by the federal government, there is more than one student loan repayment option available to you. With a standard repayment option, you make payments on your student loan for up to 10 years. On one hand, this option has a higher monthly payment. On the other hand, you’re able to pay off the balance sooner, plus you pay less interest on the loan.

You can also choose a graduated repayment plan, in which your monthly payment starts low and increase every two years. This keeps your payment affordable during the early years of your career. Your payments gradually increase as your income increases.

But what if you owe more than $30,000? It stands to reason that you will need a longer repayment term. Fortunately, federal loans also feature an extended repayment plan. This plan is available if you owe more than $30,000, and with this plan, student loan repayment is extended to 25 years.

Some graduates cannot afford a standard, graduated or extended repayment plan. If this applies to you, discuss with your lender options to receive the lowest payment possible. There are several programs available to assist if you’re low income, such as the income contingent repayment plan and the income based repayment plan. Notify your lender of financial hardship and they will work with you to find an affordable repayment plan.

Temporary Hardship

You may experience temporary hardship while on a standard, graduated or extended repayment plan. Regardless of what happens, do not stop paying your student loan. The lender may report the delinquency to the credit bureaus and send your account to collections. These moves can damage your credit score. If you cannot repay student loan debt, contact your lender to see if you qualify for a deferment or forbearance.

These are temporary hardship provisions that lower or postpone loan payments on a temporary basis – usually up to one year. If you qualify for a deferment, the government pays the interest on your loan. In the case of forbearance, your loan incurs interest during this period, which increases your outstanding balance. However, you can make interest payments during your forbearance period.


STUDENT LOAN REPAYMENT » Current Rates, News & Information

1 in 4 Americans Believe College Is a Poor Investment

College to Require Repayment Plan to Qualify for Student Loans

Study: Earning a Degree Increases Chances of Repaying Student Loans

25 Percent of For-Profit College Students Default on Loans

Should You Marry Someone With Student Loan Debt?

Why Your Student Loan Amount Should Match Your Earning Potential

Student Loan Scams on the Rise

Student Loans Repayment Gets Cheaper

For-Profit Universities Encouraging Students to Default on Loans

Congress Reviews 529 College Savings Plan