College Advice Blog

Jun 7, 2012

Managing Your Federal Student Debt Loans

There are few things that are as big of a wet blanket as student debt in this world. You spend four or more years working your hard in college to get a good degree and then you enter a horrible job market with few prospects and a mountain of student debt with few ways to pay it off. You may have very little work experience in your desired field with only a college degree to back you up. Like most college students, you probably took out a loan to pay for school. With the interest rates that are associated with student loans, it is important you manage that debt quickly and get payments under control before they get out of control. 

In 2012, the amount of student debt loan skyrocketed to more than $1 trillion, or about a fifteenth of the national debt. With an average debt per student hovering around $25,000, it seems an awful lot to ask of a young adult to just be able to attend college and be employable afterward.

Payment Plans
If the debt from the student loan is too large to pay and is managed by the federal government, then the federal government tends to offer a number of payment plans and payment deferment options to new graduates. Many of the state and college managed student loans also offer similar payment plans.

  1. Standard Repayment Plan you will pay a fixed amount each month of at least $50. This option lets you know that your payments will never increase; however, you will pay a lot in interest.

  1. Graduated Repayment Planyou will make low monthly payments at the beginning, but after a few years the payments increase as it assumes you will make higher wages as time goes on.

  1. Extended Plans – these come in a fixed or graduated repayment option, but instead of lasting 10 years, it will take 25 or more years to pay off the loan. This option also means most of your money will go toward interest.

  1. Income-Based Repayment Plan – this option is available if you think you will have financial hardship. The payments you make will be directly linked to how much money you actually make.

Other Options

The federal government also offers payment on student loans through volunteer work. By working for a non-profit organization or a program like Teach For America, a new graduate from college can actually be paid to pay off their student loan debt. Teachers who are willing to teach in low income neighborhoods and in low income programs are also eligible for a reduction in their student loan debt. Some government jobs also offer to pay sometimes up $10,000 on student loan debt as an enticement to lure more people to the jobs, especially young people who are in dire demand in some government sectors.

In the end, it is important to tackle student loan debt as soon as possible, because it will only get bigger as time passes. The good news is that there are many avenues to go down on the way to no student loan debt so pick the right one and get it done.

About the Author   

April Santos writes for the team at affordable insurance that won’t conflict with massive student debt.

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