Unlike past generations, most students today have to take out loans in order to get through school. And this money will, ultimately, have to be payed back. If you have taken out loans to fund your education, you will need to know the best ways to go about paying them off.

Once you graduate, you must first find out what type of loans you have and when your payments start. Most federal loans have a grace period of 3 to 9 months. For private loans, check your promissory note. They often have no grace period. Find out who is servicing your loans and go to your loan provider's website. There should be a section for student borrowers and a process to walk you through repayment. While you're there, you should also do some research on how to manage your loans.

If you haven't yet, you may want to look into loan consolidation, which merges multiple loans into one new loan. The new loan will combine all the outstanding balances and have it's own repayment terms, interest rate and monthly payment amounts. Basically, consolidation makes repaying your loans more streamlined and also locks in an interest rate.

Next, you should find the best payment plan for your circumstances. There are many different types of plans. For instance, you may want to consider graduated payments, which start out small and then increase steadily. This is good for recent grads who are a bit strapped for cash now but assume they will be making more money in the future. Talk to representatives at your loan provider, and they should be able to direct you to the best payment options. You can also look into ways to have your loan reimbursed, such as going into military service or certain types of education. Many companies also offer loan reimbursement after employment.

Also, regardless of what type of loan you have, understand the reality of interest. Interest is a fee that is charged for the use of borrowed money. Your interest rate is a percentage, such as 7.5%, of your total debt that will be routinely added to your overall balance. Students need to be aware of how their payment plan interacts with the interest that will continue to grow.

No matter how you decide to repay your loans, just make sure that you don't miss payments. If you miss even one payment on a private loan, it will go into default. With a federal loan, you won't go into default until after you have fallen 270 days behind schedule. However, you will receive plenty of phone calls. Either way, non-payment will result in serious marks on your credit score. Your loan may be turned over to a collection agency, or you may be sued for the entire amount of the loan. There is also a chance that your wages may be garnished up to 15% by the federal government.

Make sure that you never fall behind, because student loans are actually some of the most forgiving types of debts. In fact, if you begin to have trouble making payments, many loan providers (especially federal providers) allow loan holders to apply for deferment, which is a temporary hold on payment. You will, of course, need to prove your inability to pay, but, if you have substantial claims, you can stop payments on your loans for long periods of time. Graduates can also get deferment if they enroll for military activity or go back to school.

For more help with student loans, the U.S. Department of Education provides information on loan types and the total amount of all your loans at The National Student Loan Data System


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