Student Loan Repayment Plan - The Pathway to Success

Student loan debt is money owed on an educational loan, which has been taken out to repay certain educational expenses not covered by the student's original loan. Student loan debt is generally incurred when a student utilizes various loans from parents, friends, or grants to pay the part of college that hasn't been paid for through their personal assets, grants, scholarships or other loans taken from government sources. With this kind of student debt, there are two kinds: secured and unsecured. Secured student loans are given to students as part of financial assistance offered by schools or universities. Examples of such loans are the Perkins loan, FFEL loan, federal PLUS loan, and Stafford loan.

The federal PLUS loan program offers student borrowers the choice to consolidate their student debts into one single loan and pay only one installment per month instead of paying two. The second kind of student debt is unsecured student debt that is not backed by any collateral or guaranteed by the United States government. Students who graduate and go straight out into the workforce without securing any of these types of loans may find themselves in a difficult financial position and unable to retain their job. Repayment of these loans will be slow and will often come in small amounts rather than large lump sum payments. Some of the common options for repayment are: loan consolidation, forbearance, deferment or forbearance.

Loan consolidation is when the college or university to take over the loans from a variety of sources and disburses them into one package. For instance, if a student debt incurred through tuition fees, books, and room and board is owed from two different colleges, two separate loan packages must be obtained and paid off. However, if the college maintains one loan for the entire cost of college, it will also be much easier for the student to repay. There are a number of advantages to consolidating student debt including the fact that interest rates are often lower, payment dates are usually extended and subsidized loans are made available.

Student loan debt incurred while attending college is also handled by federal programs such as the Pell grant. Under this program, a student may borrow up to the maximum amount allowed by the federal government every year. The interest rate is also much more attractive compared to that of unsubsidized loans. Furthermore, once the student has graduated from college, he or she will not be eligible for the Pell grant. Students who are in financial need should always consider applying for financial aid as much as possible.

Private student loans have also become a popular option to borrow money. In contrast to federal student loans, private loans are issued on a need-based basis. As such, parents must consider their personal situation to determine whether to borrow. As opposed to federal student loans, parents who are in good standing with their respective colleges can receive unsubsidized private student loans at a lower interest rate.

There are also ways to reduce your college loan repayment obligations. You may consider borrowing only the minimum required by your college's regulations, thereby avoiding additional payments on top of your basic loan repayment responsibility. Another option is to borrow at a subsidized interest rate while still enrolled in school. With unsubsidized student loan repayment, you must repay the full amount even if you've graduated.

However, it is important to remember that even though you're enrolled in school, you still have to make payments on time. A borrower should make payments regularly. The most common student loan repayment plan period is 30 months. This means that you must make payments every month except for the first few months while you study. This plan allows you to use loan funds for your education without having to worry about repayment. On the other hand, if you choose to defer your loan payments, you'll be required to make payments until you finish your education.

There are a number of federal student loans that offer forbearance or deferment options. These repayment plans allow borrowers to continue making loan payments for a specified period of time after they graduate. If you wish to pursue an advanced degree, you can defer your loan payments until you finish your course. However, you should know that forbearance and deferment do not affect accrued interest or penalties.