Finding the best way to pay back your student loans
Paying back student loans could be a hassle especially as life gets in the way.
As of 2017, 1 in 4 Americans has student loan debt. The national average for students graduating from a four-year bachelor degree program have roughly $37,000 in debt, which in comparison, is the average cost for a wedding, starting a business or even a Tesla Model 3 car.
“Don’t let your loans go into delinquency or default because there are usually options available to pay it back,” stated Susan Johnson, Assistant Director for Operations in the office of Financial Aid and Scholarships at UW-Stevens Point. “I like to tell recent graduates to start paying on the interest during their six-month grace period if possible.”
After college graduation, the U.S government gives students six months before you are required to start making payments on the loans, however, interest on the loans still increases during the grace period.
“For unsubsidized loans, that’s always recurring interest regardless. For a subsidized loan, interest does not recur for certain types of deferments like if you enrolled in a Master’s Program or are still in school,” added Johnson.
The government currently provides four ways for people who have student loan debt to repay.
“Generally the government will put students on the Standard Repayment Plan, which is 10 years of 120 payments,” explained Johnson.
People on a Standard Repayment Plan can expect to see their monthly bill to be roughly $400.
Another payment option provided by the government is the Graduated Repayment Plan, which is similar to the Standard Repayment Plan. With this option, your monthly payments are smaller after graduation but increase every two years for ten years. Under this option, your loans would still collect interest.
If these two options don’t fit your financial situation, maybe you could think about the Extended Repayment Plan which stretches out your monthly payments for 25 years while still collecting interest. This option is only available for those who have more than $30,000 in student loan debt.
Lastly, the Income-Driven Repayment Plan is based off your yearly income and household size for as long as needed to repay the debt, but keep in mind, your loans still accumulate interest over the years.
To learn more about Federal Student Aid
For more resources on how to manage your student loan debt