Making Student Debt More Manageable

Student Loan Repayment Programs – Making Student Debt More Manageable

Student loan repayment is an important part of establishing and maintaining a student’s financial status. There are a variety of repayment options available. Loans can either be subsidized or unsubsidized. Subsidized loans require the student to work while paying the loan back at varying rates.


Most federal student loans are subsidized.

Students receiving subsidized loans must have a fixed interest rate throughout their grace period. Loan repayments may be subsidized for five years beginning with the grace period after graduation, or they may be subsidized for ten years beginning with the grace period immediately following graduation. Loan repayments may change each year.


Federally subsidized repayment plans start out

as subsidized Stafford Loans. The payments start low, but graduates can also find themselves paying interest rates that double or triple what they paid on their original subsidized Stafford Loan. Students can consolidate their subsidized Stafford Loan into one of many other types of federal loans including Perkins, Direct, Guaranteed, Health Professional, and Subsidized Stafford Plus. These repayment plans allow graduates to spread their payments out over the life of the loan. Many students also find that they make better financial decisions if they also have some kind of savings account.


A graduate may be eligible for a federal student loan forgiveness

if they meet certain requirements. Graduate students who start with at least a 3.0-grade point average, and who qualify for automatic disqualification due to their federal subsidized loan forgiveness, usually have enough saved to pay back the loan in full. Forgiveness does not occur because of low earnings or excessive debts. Instead, graduates must work outside the scope of their subsidized Stafford Loan to meet qualifications. This is often a challenge, and students must work very hard to pay off their loans in full.


Graduates may also be able to consolidate their federally-funded student loans.

This allows them to combine subsidized Stafford Loan payments into one loan with a significantly lower interest rate. This means that the total loan cost is lower. Repayment begins once the first payment on the new loan is complete. The amount of interest the borrower will pay on this loan will not be added to the total loan cost as it would be with a subsidized Stafford Loan.


Consolidation allows a student borrower

to use their subsidized Stafford Loan payments to reduce total student loans. Repayment begins once the borrower finishes his or her federally subsidized loan repayment program. Graduates will have to begin repaying their loans on their own. This can be done through direct payments from the government, through a lender who specializes in federal student loans, or through a combination of all of these methods. Finding out more about consolidation may help a student budget his or her student debt.

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