How to Repay Those Student Loans

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When you apply for student loans, you know that the day will inevitably come when you have to repay those loans. This can be a challenge, considering the difficulty many new graduates are having in finding good jobs (or any jobs), and it’s confusing, even for those lucky students who have good jobs. So here are some great tips for what to do after you apply for student loans and the day comes when you have to pay the piper!

First of all, remember that you can’t consolidate a private loan with a federal loan. When it’s time to start paying your private loan bills, choose the shortest repayment plan you think that you can handle. Many people think that they’re keeping their payments down if they choose a thirty year schedule rather than the more common twenty year schedule. Well, they are….but only by 10 percent. Over the life of the loan, though, you’ll be paying two thirds more than you’d be paying if you stuck with the twenty year schedule. So try to come up with the ten percent and in the long run you’ll save yourself a lot of money over the twenty years of payments. It’s a good idea to see if private lending institutions will negotiate a little bit over your rate or the length of your repayment schedule. Unfortunately, chances are pretty good that they won’t. Private lenders are under no obligation to do so, and by the time you’re ready to pay back your loans, the original lender may not even still hold your loan. But it doesn’t hurt to try.

All federal student loans you have should be consolidated through the new Direct Loan Program. The government offers several different repayment options for federal student loans. And you may even qualify for forgiveness of your loans if you’re a public service employee. If you work for an agency called a 501(c)(3), it’s possible that you may qualify for the “public service loan forgiveness” program. This will cancel whatever debt you have remaining on your loan as well as whatever interest is not yet repaid. For this to happen you have to have been a full time employee in your public service job for at least ten years. The forgiveness is even tax free.

So remember that when you apply for student loans, that you’re going to have to pay them back. For the best deal, get as much from federal loans as you can before resorting to private loans!

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