Student Loan Repayment Help – Know Your Options
Paying your bills is getting harder in this challenging economy. Are you a graduate struggling to pay off your student loans? Would you like to see the full spectrum of student loan repayment options available to you? To do this, you must know what type of loans you have and the options available for each one.
There are basically three types of loans.
The first, and most common, are loans made by banks and the federal government, known as federal loans. The second is loans made by your school. The third are private loans made by banks or other financial institutions that do not include government guarantees.
If you have federal loans, your first option is to repay the loans as agreed. This can take up to 10 years. If you can’t pay off your loans as quickly, you can spread your payments over a longer period of time, typically up to 25 years. You can also set up a plan where your payments increase over time, or go up and down with your income. Federal loans can also be consolidated. Consolidation can only be done once, and the rules for consolidation vary depending on the dates the loans were made. Consolidation can result in a lower interest rate, lower payments, and an extended payment schedule.
If you are unemployed or have health problems, you may be able to temporarily postpone all payments on your federal loans. This is called a deferment, during which your loan balance does not increase. You may also qualify for a forbearance, during which your balance increases because interest is added to your loan, but your payments stop altogether. On rare occasions, student loans are paid off.
The options we have discussed do not apply to loans made by educational institutions or private lenders. If you have this type of loan, you should contact your lender to request payment arrangements. These arrangements probably won’t be as lenient as those offered by the federal government.
If you’re having trouble paying off your student loans, one of the many student loan repayment options may be right for you. It is important to determine the type of loans you have. Federal loans offer the most options. School and private loans must be negotiated with the lender. Whatever you choose to do, stay in touch with your lender to avoid costly damage to your credit rating.