Repaying Student Loans

You know the day to start repaying your student loans has to come, but you probably hope it will be later than sooner. What you may not be aware of, though, is that you have many options for repaying your student loans, and you are not locked into one payment method or schedule.

In addition to flexible repayment schedules, you may also find and participate in or otherwise qualify for programs that aid in your student loan repayment or even provide loan forgiveness.

Choose the topic(s) appropriate for you:
Choosing a Repayment Schedule
Using Deferment and Forbearance Time
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Choosing a Repayment Schedule

A repayment schedule is an official arrangement stating your monthly installment amount and the day each month that amount is due. This repayment schedule is a real obligation, and there are very serious consequences to you for failure to meet it (such as default, garnishment of wages, and difficulty/inability to secure future loans).

You need to examine your financial situation carefully at the time you start repayment to make sure you are on the schedule that best meets your ability to pay. You have more than one option for your repayment schedule.

Level: The payment amount due each month remains the same (except for small changes that may result from a rise in the annual interest rate).

Graduated: The payment amount due each month changes throughout the repayment period based on a specific set of factors. Some borrowers need smaller payments in the beginning, while they're job-hunting or trying to get settled, then can afford larger payments later. Some borrowers have to request income-based, income-contingent, or income-sensitive repayment, and their payments are based on a percentage of their incomes and other factors.

Most repayment schedules are set up on level repayment unless you request otherwise. Changing your repayment schedule is generally easy to accomplish but will probably require something in writing from you to your lender or loan servicer since it is an official change to your existing agreement.

Using Deferment and Forbearance Time

Deferment and forbearance are both authorized, temporary suspensions of your student loan repayment. They are granted under a varying set of circumstances that can range from half-time or full-time enrollment in school, participation in a medical internship/residency program, military obligation, unemployment, temporary financial hardship, etc.

Sometimes deferment may be automatically applied on your behalf, but in most cases you must apply, meet the qualifications, and make arrangements with the servicer of your loans to receive an official deferment or forbearance. Be aware that loan programs come with limited amounts of deferment and forbearance time, so you must utilize your time wisely.

Whether you have subsidized or unsubsidized loans also affects your repayment obligation. If you have subsidized loans, the federal government actually pays your accrued interest during approved periods of deferment. If you have unsubsidized loans or if your subsidized loans qualify for forbearance rather than deferment, then you remain responsible for paying the accrued interest for your loan(s).

YouCanDealWithIt.com

Frustrated by the complexity of student aid, including loans? Don't know where to begin? YouCanDealWithIt.com can help. On YouCanDealWithIt.com, you will find a lot of practical advice about paying for college. Each section provides easy-to-understand information, tools and calculators, and other helpful advice to help you manage your student loans.

You CAN deal with it.