Things You Never Knew About Repaying Student Loans


The majority of students who graduate from four year colleges and universities have student loan debt. The average loan amount per graduate is over $25,000.

Prior to July 2012 there was a six month grace period after graduation before interest started accruing on the student loans. Since July 2012 the grace period no longer applies and interest will start as soon as the student graduates. Graduates likely have a combination of both types of loans.

There are some ways you can ease the repayment of student loan debt. You can contact your loan service to see if your repayment plan can be extended for a longer time period with lower monthly payments.

If you have your monthly payment for your student loan automatically deducted from your bank account each month your interest rates should be lower.

If you have a large debt in relation to the income you earn you may be eligible for a pay as you earn repayment schedule. This will allow you to put 10% of your discretionary income toward your loan for 20 years after which any balance remaining is forgiven.

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If you are an employee of some public service agencies or some non-profit organizations then loan forgiveness may be available to you. You will need to pay your student loan obligation for 10 years and then the loan may be forgiven. Some organizations that qualify for this program include federal, state, local and tribal governments, public child or family service agencies, public health agencies, public schools and colleges, safety and law enforcement, Americorp and the Peace Corp.

If you become disabled and are approved as disabled by an agency such as Social Security or the Veterans Administration you may be eligible to discharge the debt for your student loan.

If you should default on your student loan it will not only damage your credit score it may lead to withholding of your tax refund or garnishment of your wages. Default on a student loan occurs when you haven’t made a payment for 270 days. To avoid default make at lease one payment every 250 days.

To rehabilitate a loan in default you can work with your loan servicer who may be able to place your loan with a new lender. You will need to negotiate with the lender to see if you can agree on a repayment plan that you can handle financially and that will be acceptable to the lender.

If you simply just cannot make the payments on your student loan , trying to discharge your student loan using bankruptcy may be possible. It will not be easy. You will need to file a lawsuit and prove paying the outstanding loan will cause undue hardship. You may be able to obtain a Chapter 13 bankruptcy which is a repayment plan based on your income and expenses.