Student Loan Repayment

If you're going back to school for the first time in years and are looking for a way to pay for it, the prospect of student loans may have crossed your mind. It's an extremely common way to pay for tuition and is likely to be a way for you to cover at least part of your tuition costs.

But dealing with student loans is not always a piece of cake. You have to fill out all the necessary paperwork to qualify, and then figure out just how you will pay the loan back. The more you educate yourself on student loans, the easier it will be to deal with.

Learn the different programs out there that will help you get your degree:

Types of Academic Aides you Should Know About:

The most popular types of student loans available are Federal loans, which are available through the U.S. Government. You can apply for the Stafford Loan, which offers both need-based and non-need based loans with low interest rates. If you obtain a subsidized Stafford Loan, the government will pay your interest while you're in school. If your loan is unsubsidized, you will be responsible for your own interest payments.

Another Federal loan is the PLUS loan, which is available to parents with children who are at least half-time students. These are awarded based on credit history and cost of attendance. Students can also qualify for the Perkins loan, which are awarded to students in extreme financial need. They offer very low interest rates as well.

In addition to Federal student loans, you may take out private student loans. For instance, you might request a loan from your bank or credit union. In this case, the repayment terms are likely to be much different. You may be required to begin repayment while still in school, which is sometimes tougher to handle. Also, you may incur more interest than with federal loans. So as you think about the type of loan you want to take out, it's good to consider all the baggage that the loan brings with it.

How to Obtain Student Loans:

Federal student loans are acquired by filling out a FAFSA form (which can be done for free online). Once you apply and are accepted to your school of choice, you will receive information that maps out how much you will receive. For private loans, you will have to inquire with the private institution or individual offering them.

The biggest issue with student loans is paying them back. So it's best to only accept the amount you truly need for school so that you can lower the risk of defaulting and damaging your credit, which will defeat your positive intentions behind going back to school.

The thought of going back to school after having been out of school for so long can seem distasteful, especially after you've already paid off your college loans just to realize you may have to take out another student loan. It's hard to stomach the thousands you may end up owing again.

Luckily, there is a new law that has been passed that can make your loan repayment easier than ever before.

What Is This New Law?

The new law is called the College Cost Reduction and Access Act. It just took effect on July 1, 2009, this law was set in place to help make college more affordable by making repayment options simpler.

How Does It Work?

There are a couple of components associated with this law:

• Income-Based Repayment (IBR) - This component places a cap on the monthly student loan payments to be made based on the borrower's income and family size. So if you are an eligible borrower, your IBR loan payment will be less than 10 percent of your income. The lower your earnings, the lower your loan payment. Also, after 25 years of making qualifying payments, if you have any remaining debt, it will be forgiven. The downside to this component is that you have to make sure you take out the right type of loan to qualify. And what's more is if you get married, your spouse's income will count when calculating your monthly payment.
• Public Service Loan Forgiveness (PSLF) - The second component of this law is the PSLF, which retires the direct or guaranteed (FFEL) student loan debt of public service professionals who have been making 10 years of qualified payments on their loans. Public service employment includes: nonprofit employment, government, public school or college employment, and national service participation (i.e. Peace Corps).

If you don't think you might qualify for this new loan repayment law, you might consider checking with your employer for tuition reimbursement options. This way, you can make it a little easier to afford new school loans.

Life does not always deal the hand you the hand you want. Despite the best laid plans for graduating college and paying back your student loans, there are things that can happen that derail your plans. If you are a victim of unfortunate circumstances, you may be able to get more time to pay back...