Repaying student loans, while a financial hardship for many, can be done at some level by practically all borrowers if you have some income. The options presented here are assume that:
You have a job, and
You can afford at least $5 a month to spend on your student loans.
If neither of those criteria describes your circumstances, you've got bigger problems than just student loans. For now, though, I'm going to assume that you have some level of income, no matter how modest, and that you can pay back something on your student loans, but you just want it to be a comfortable amount each month, not something that stresses you out every paycheck.
Happily, there are several options to reducing your student loan bills—both in the short term and in the long run. The key question is:
What kind of relief do you most need? Are you desperately short of cash right now and in dire need of drastically lowering your current student loan bills? Then you'll likely pick a payment plan that will allow you to stretch your student loans out over a longer time period. That will give you instant financial relief, but it will also increase the total amount of your repayments in the long run, because you'll be paying finance charges over an extended time frame.
Remember when you were in school, and you had some college professor who put practically everything in terms of a formula? Well, if you had to express your student loan repayment options as a formula, it would look something like this:
Lower payments today = extra monthly cash now + additional future finance charges
Higher payments today = less available cash now + fewer finance charges in the future
There's always a trade-off, depending on what objective you'd like to accomplish. Easier payments in the short run (i.e., today) mean more money in the long run. This holds true no matter what type of student debt you have—federal loans or private loans. As long as you understand that basic premise, which is at the root of all student loan repayment scenarios, you can make the best choice as to how to proceed based on your individual circumstances.
Let's address those federal loans, which are the most common form of college debt. To begin with, there are four different types of repayment plans for your federal student loans:
Standard repayment
Extended repayment
Graduated repayment
Income contingent repayment
If you're a student, you can choose any of the four plans. But for parents with PLUS loans, only the first three plans are available. The same thing applies to direct loans: you can only select the standard, extended, or graduated repayment options. Also, don't worry about being locked into one plan for life. You are permitted to switch from one plan to another, depending on your financial status.
Article Title : How to Reduce Those Student Loan Bills
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