How to Repay Student Loans

Prompt repayment of your student loans will require a bit of frugality on your part.

For many, college graduation is a time to reflect on accomplishments, plan for the future and embark on a career. If you have received financial aid, however, it is also a time to turn your thoughts -- and your checking account -- toward repaying the monies owed. For the most part, the U.S. Department of Education allows a six-month grace period before you are to begin loan payments. Once you commence, you will find that you have many flexible options depending on your financial situation.

Instructions

1. Start saving your money as early as possible -- even before you begin your first job after college, if possible. Minimum payments usually fall in the $50 range, so try to save at least that much every month. Once your payments begin, you will then have more options depending on your finances. For instance, you can get ahead by paying what you've saved for the first installment. Or, failing that, you can take comfort in having the better part of a year's worth of payments as security.

2. Decide which repayment plan is best for you. Not everyone has a storybook end to their college career, especially when the economy is sour. If that happens to be the case with you, then the standard 10-year repayment method may not be your best option. Other plans, such as the extended or graduated repayments, may work better, as they allow for smaller payments to be made over a longer period of time.

3. Make more than the minimum payments, if possible. Just like with any other private-sector loan, the government charges interest on what you owe. Granted, you can claim that on your taxes at the end of the year, but you still don't want it to accumulate too much, as it can cut into how much you are paying toward the actual loan as a whole.

4. Pay consistently. If you go through a stretch when making payments proves problematic, then first and foremost you should not miss one and tell yourself that you'll make it up the next month. Just like with any other debt, nonpayment of student loans can result in a bad credit rating. If money is temporarily too tight, then the best option is forbearance. You simply fill out a form online stating your financial hardship and how long you wish to suspend your payments. If you have regular difficulty with paying, then you can easily call and retool your monthly amount to suit your needs.

References

• Federal Student Aid: Repayment Information
• Federal Student Aid: Repayment Plans and Calculators