Repaying Student Loans

When you take out a loan to pay for college or graduate school, you must repay that loan at some future date. If you find yourself in the position of having to budget every month for a student loan payment after graduation, you are not alone. A majority of students now borrow at least some money to help finance their education. Yet excessive student loan debt can have negative ramifications. For example, student loan debt may affect decisions to buy a home, a car, or to have children. Because student debt levels are likely to continue to increase as the cost of college and graduate school continues to outpace inflation, it is important to know how to manage student loan debt.

Repayment options

The federal government offers several flexible repayment options for student loan borrowers. Along with the standard 10-year repayment plan, the government offers graduated plans (your monthly payments start out low and increase over time), extended plans (you extend the time you have to repay for up to 30 years), income-sensitive plans (your payments are tied to your monthly income), and consolidation plans (you combine several loans into one loan with a lower monthly payment). Private lenders may or may not offer all these options; contact your specific lender for more information.

When you know your repayment options, your next step is to determine, using a monthly budget, the amount of discretionary income you have available each month to put toward your student loan.

What happens if you can't repay your student loans?

Rare is the individual who hasn't run into difficulties at one time or another in repaying a student loan. If you do run into difficulty in repaying a student loan, take a proactive approach.

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