Student Loan Repayment for College Graduates

Student Loan Repayment for College Graduates

by Kevin Hodge

If you've graduated recently, or are in your final semesters, it may be time for you to start thinking about student loan repayment. One of the most basic things to remember for those who have borrowed money through the Federal Stafford Student Loan program is that you have options for the way you repay your loans. Student loans are typically set up on a ten-year repayment program, with a set minimum payment due every month. However there are options that could make a big difference in the amount you pay each month and the total amount paid in the long run.

Graduated and Income Sensitive Student Loan Repayment Options

You may qualify for a graduated or income-sensitive repayment plan. These can be great for graduates who are unsure about how much money they will be making as they begin their careers.

A graduated plan starts with relatively small minimum payment which is scheduled to increase over time. Income-sensitive payment plans adjust the minimum payment based on how much money you are making at the time.

Consolidation Loan for Student Loan Repayment

If you choose to take out a consolidation loan, your options may change. The monthly payment may be higher but you may end up paying less total on the loan in the long run.

Remember you can only consolidate once, so be sure that you are getting the best interest rate and payment plan with your consolidation. Shop around to various lenders if need be. Be sure to speak with your school's financial aid advisor and a representative of your lender bank before deciding how to go forward with your loan repayment.

Repayment Grace Period (Deferment)

The good news is that no matter what type of repayment plan you choose, you normally have six months after graduating before having to begin making payments. Federal student loans are typically deferred until six months after a student is no longer enrolled in school for at least half time. This can be a tricky one if you decide to take a semester or two off during your education. Just remember, everyone is entitled to one, full, six-month deferment, regardless of whether they graduate, drop out from partying too much, or have to stop and go earn more tuition money. (Both happen to the best of us.)

If you are out of school for a period of less than six months at any time, that full six-month deferment you're entitled to will still be there when you really are finished with school. It's not like you're using up any of that time for taking just one semester off. If you stay out for six months or more before you go back though, you will likely be asked to start making loan payments directly after graduation, because your six month deferment has already been used.

Get Help with Choosing the Best Repayment Plan

Student loan repayment can be a dreaded situation for those who have a high student loan balance. Be sure to visit with your financial aid counselor to discuss all of your options. They may have some ideas for you to make the situation less stressful. Armed with information and sound advice, you can choose the best student loan repayment option for you.