Paying off Student Loans

By Leah Gorham

For many of us, student loans are a necessity to help pay our way through college, and we hope that after gradation and once we enter the working world, we will be able to pay these loans back. The average student is carrying a record debt load of more than $23,000, and unemployment rates for recent graduates are climbing. However, graduates do have options that could make the debt more manageable.

Before considering repayment you need to examine the type of loans you have and separate them by loan type. These include, Perkins loans, Subsidized Stafford loans, Unsubsidized Stafford loans, and Stafford loans issued before 2006. The loan types must be separated because each loan has different interest rates and accrues interest differently. Then you can pick repayment schedule. These include: standard repayment, which repays your loan over a 10-year period, extended repayment, which allows you to repay a significant balance over as much as 30 years, or income-based repayment, which allows you to pay what you can afford, based on your discretionary income.

There are some breaks to be aware of for Stafford loan borrowers to be aware of. You are entitled to a payment deferment if you go back to grad school, can't find a full-time job or experience economic hardship. You can also lower payments by stretching out the loan term. Lastly consider consolidating your loans for convenience. For low-income borrowers, the new federal program called the Income-Based Repayment (IBR) program, can help limit monthly payments by limiting monthly payments o to less than 15 percent of income.

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