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For most students and many parents of soon-to-be college students, the financial aid path begins with student loans. The cost of attending college for four or five years has gotten so expensive that without loans, like the Stafford Loan and PLUS Loan, most wouldn’t be able to afford tuition and the many related college expenses. It’s great that money for college is available, but after graduation borrowers are faced with the brutal reality of having to pay back all of the money they borrowed in order to attend college.

So really, college student loans are a blessing and a curse. The ultimate double-edged sword! Having a college degree pays off big-time when it comes time to finding a job and advancing one’s career over many years. Most students wouldn’t have that degree without the loans they took out – whether to obtain an undergraduate degree or for medical or law school. But the value of the degree doesn’t diminish the mental pain associated with debt burden. Fortunately, steps can be taken to make repayment of student loans easier.

Students should really start thinking about repaying loans before graduating or within weeks or maybe a month afterwards. Fortunately, the banks that lent you money and your school’s financial aid office should let you know how much is owed, loan interest rates, and what your monthly payments will be. It’s important to read each and every document very carefully to learn about forbearance rights, penalties for late or missed payments, the potential to defer payments, have the loan discharged, or ways to consolidate loans. Life is bound to throw you a curveball at some point, and you might need some flexibility around a loan payment. Knowing that you have some flexibility or loan repayment options will reduce your stress level when those curveballs come your way.

The paperwork from your financial aid office should also include a contact phone number and possibly a customer service email address. Loans take years to pay off, and during that time it may be necessary to notify lending institutions about changes of address, last name, phone number and so forth. Remember, your credit rating could suffer mightily if you miss or make late payments! Stay on top of your debt so that you won’t have trouble purchasing a car or home down the line.

There are several free informational college financial aid websites that explain, in great detail, everything there is to know about government student loans, from the types available, eligibility, and repayment terms.

STUDENT LOAN REPAYMENT
As mentioned above, there are several different kinds of student loans going by a variety of names: Stafford Loans (direct and FFEL), PLUS Loans, and Perkins Loans. Each type of loan has its own unique repayment terms as you will learn below.

Those who have taken out Direct Stafford and FFEL Stafford loans must start repayment six months after graduating or leaving college or dropping below half-time enrollment. Subsidized Stafford Loans do not accrue interest during the six month window while unsubsidized loans do accrue interest — both during the grace period and during the time one is in school. Any interest amount accrued is simply tacked on to the principal (capitalized), which is the amount one borrowed.

There are several repayment plans for Stafford Loans, both FFEL and Direct Stafford Loans. First, the default repayment period is ten years. But borrowers can pursue repayment plans that are contingent on income or extended beyond ten years.

Here’s something you should keep in mind. It may be tempting to simply select a graduated or extended plan, which might be easier on the budget, but that means paying back student loans could go on for 25 years! It’s a more expensive option, too, because more interest accrues. The longer one takes to repay the loan, the pricier that loan and your college degree – becomes.

Borrowers can choose the standard, default repayment option or an extended plan at first. Then, if your personal circumstances change, you can simply change the repayment plan later by contacting the lender.

Terms on a Perkins Loan are different than those for Stafford Loans. For instance, instead of a six-month grace period to begin repayment a Perkins loan gives nine months. Furthermore, all Perkins Loans are fully subsidized, accruing no interest while the student is in his or her grace period or still in enrolled in school full time.

Students who have taken out a Perkins Loan are given ten years to repay the loan, and payments are made to the school that disbursed the money (e.g., one’s undergraduate school). Borrowers can take solace in the fact that there are no penalties for early payoffs!

It’s no fun having thousands of dollars in loans to repay after college, but the debt is usually worth it considering the value of a college degree. Learn about other types of college loans and college scholarships on the Internet.

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