How to Pay Back Student Loans

Getting into college is hard enough without worrying about how you’re going to pay for it. Receiving student loans helps to alleviate those concerns, but it doesn’t eliminate them entirely. Eventually, you have to pay those loans back, but it doesn’t have to be an anxiety-producing problem.

Paying Back Federal Student Loans

There are eight student loan repayment plans offered by the Federal Student Aid office of the U.S. Department of Education. Each plan is only eligible for certain loans and comes with its own terms and eligibility qualifications. Key to paying back your student loans quickly and easily is finding the repayment plan that fits your circumstances and abilities.

To pay less money overall than with other plans, consider the Standard Repayment Plan. It’s available to all federal student loan borrowers and offers fixed payments for up to 10 years on most qualifying loans.

To pay less at first and increase the size of your payments over time, consider the Graduated Payment Plan. Again, all federal student loan borrowers are eligible and get up to 10 years to pay off the loan. The downside of this repayment plan is that you’ll ultimately pay more after 10 years than you would on the Standard Repayment Plan.

To spread out repayments on your loan over a longer period of time, consider the Extended Repayment Plan, which gives you up to 25 years to pay back the loan. There are certain eligibility requirements, depending on the loan. Payment amounts will be smaller than under the Standard or Graduated plan, and borrowers pay more overall over the extended time frame than under the Standard Plan.

The remaining five repayment plans determine your payment terms based on how much you currently earn in the workplace.

* Pay As You Earn Repayment Plan (PAYE)
* Revised Pay As You Earn Repayment Plan (REPAYE)
* Income-Based Repayment Plan (IBR)
* Income-Contingent Repayment Plan (ICR)
* Income-Sensitive Repayment Plan

Each of these earnings-based repayment plans have their own terms and eligibility criteria.

Tips for Paying Back Federal & Private Student Loans Faster & More Affordably

Whether your student loan debt is federal or private, there are several steps you can take to make paying back your student loans a painless process. Starting to repay your student loans as soon as possible is perhaps the next most useful action you can take to pay it down easily and fast. At the very least, start making payments as soon as you graduate. However, if you’re really feeling motivated, you can even start making pre-payments on your student loans while you’re still in school.

What’s more, you can make each of these pre-payments pack the maximum wallop in reducing your student loan debt by making sure that each of them are applied to the principal of your loan rather than the interest. By paying down principal first whenever possible, you reduce the overall amount of your loan, which means interest is charged on a lower amount.

Just be sure that your lender permits such pre-payments without a penalty. Some private loans penalize borrowers for making pre-payments while still in school. Most federal student loans, however, allow these pre-payments without penalty. Additionally, federal student loans can be subsidized or unsubsidized. Subsidized loans don’t accrue any interest while you’re still enrolled in school, while unsubsidized loans begin accruing interest from the moment the money is borrowed. Therefore, if you have multiple types of federal student loans to pay down while still in school, choose to make prepayments to your eligible unsubsidized loans so as to reduce the amount of interest accruing.

Once you get out of school, reducing your expenses can help tremendously in paying back your student loan debt. Living at home with your parents or guardians, for example, or co-housing with a group of likeminded young adults who share housing costs are ways to reduce your overall overhead and empower you with more money available to apply toward paying down your debt.

Finally, student loans can always be privately refinanced. Plenty of banks and other online lenders are more than willing to refinance all your student loan debt, federal and private. Just be sure, when considering this option, to do your due diligence. The federal government has very strict standards protecting you, the borrower, as much as the lender from fraudulent or dishonest behavior. Other lenders aren’t always so beholden, so be sure to research the exact terms of any loan you’re considering before you sign on the dotted line.

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