Repayment Options

Because most college students don't get jobs immediately after graduation, lenders usually offer a grace period of about six months before you need to start repaying your student loans. Take time during your grace period to organize your finances and evaluate your options.

There are many different ways you can arrange your payment schedule, depending on what you can afford:

  • The standard payment plan, if you can afford it, will offer you the lowest total loan cost.
  • A graduated payment plan will start you out with lower payments that increase as time goes on.
  • With income-related payment plans, your monthly payment amounts are tied directly to your income instead of rising gradually no matter what your income.
  • Extended repayment allows you to make smaller payments for a much longer period of time.

If a lender can offer you a lower interest rate and consolidate your loan payments into one convenient payment, you could save a lot of money over the life of your loan.

NOTE: If you don't pay your loans for six months, you will face collectors, your credit score will suffer and your likelihood of being approved for car loans, mortgages and credit cards in the future will be greatly reduced. Staying on top of your loans from the get-go and determining the best repayment option for you are some of the smartest financial decisions you can make.

Paying Student Loans

You have the education. Now it's time to start paying for it. Easier said than done. But the following information may make paying back your student loans just a little bit easier.

Exit Interview

If you have taken student loans, your school is required by law to give you an exit interview. This is simply a time to meet with a financial aid advisor to discuss your repayment obligations and options. Make sure not to miss the opportunity.

Loan Forgiveness

As an unemployed recent college graduate, you may have more time than you have money. You can get help paying off your loan by volunteering for certain government projects with some forgiving your debt entirely.

Peace Corps - not only allows you to visit exotic locations and challenge yourself, but you can cancel a substantial portion of your Perkins loans in return for service. You can receive a 15% cancellation on each of your first two years and 20% on your third and fourth years. That's a 70% reduction for four years of service. You do have to contact your lender in advance of your term of service to receive your cancellation credit.

Americorps - If you like the idea of the Peace Corps, but don't want to leave the country, Americorps is for you. You can receive up to $7,400 for living expenses and, after a year of satisfactory service, $4,725 to be used toward education. The education award can be used for future education or to pay off your student loans. The work itself can be reward enough: cleaning up the environment, helping at-risk children and other positive community-building services.

Military Service - The Army, Air Force, Navy, Marines and the National Guard all offer education assistance programs. Check with your local recruiter to find out how these programs can help you.

Teaching - Depending on where and how long you teach, you can receive complete loan cancellation or at least a deferment of some loans by filling some understaffed teaching positions, including teaching in schools serving low-income students or teaching certain subjects in which there is a shortage of teachers.

Legal and Medical Service - If you choose to study medicine or law you can rack up some hefty education loans. But there are programs that offer partial cancellation of loans for public service.

Tools to Help Private Student Loan Borrowers

The Consumer Finance Protection Bureau released a sample letter that consumers can customize and send to their student loan lender to request lower monthly payments and information on available repayment plans.

The Bureau also developed a sample financial worksheet to help borrowers determine how much they can repay on student loans.

Additional Links to Assist with Your Transition from College:

Welcome to the Workforce

Landing a Job

Paying Student Loans

Internship Resources

Loan Forgiveness