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Manage Your Student Loans After Graduation

Manage Your Student Loans After Graduation

By Lauren Bayne Anderson

April 29, 2011

You may be excited about graduation, but our guess is that all that excitement ends when it comes time to start paying your student loans.

Paying student loans is never fun, but it’s especially tough in the current economic climate, where many graduates will have trouble finding a job, and others may be underpaid.

Unfortunately, there are serious consequences to not paying. The good news is, almost all loans— public and private —offer a 6 month grace period. This gives you a chance to get a job and start earning money before you have to start paying.

And if you need more time, many lenders will offer you a “forbearance” that allows you to continue to put off your loan payments for a number of reasons. However, forbearance time is not unlimited. So use it only when really needed.

There are several options that you have when it comes to replaying federal student loans:

The standard loan repayment plan
With this option, you’re required to pay a minimum of $50 a month, and your payments last for as long as 10 years. According to, this plan represents the single fastest way to pay off student loans.

The extended repayment option
With this option you’ll still pay at least $50 a month, but it will take from 12-30 years to pay off your debt.

The graduated repayment program

This repayment option lasts from 12 to 30 years and allows you to pay as little as $25 a month. Again, it’s a choice for those who can afford to repay their loans but want lower monthly payments.

The income-contingent repayment plan
This option generally permits you to make payments of as low as $5 a month, but it lasts for 25 years. The key to this program is that you’ll always have what the Department of Education defines as an “affordable” repayment option since your student loan payment is tied to your income. Your student loans payments will be 15% of your income, to be exact.

What about private loans, you ask?
If you can’t afford to start paying on them, use your forbearance time, then plan to consolidate your loans once that time is used up. Consolidating is a good idea because it can lower your interest rate and consolidate multiple payments into one. You’ll also “start over” when it comes to the amount of forbearance time offered.

Information compiled largely from