How to Pay Back Student Loans

August 8th, 2009 by Mike

Student loans are a great way to pay for college, but they must be paid back. The length of time it takes to pay off the debt will largely depend on how much the individual owes. There are however, various ways to pay back student loans.

Consolidation

Many student loan companies will allow the former student to consolidate their loans into one monthly payment. This is not through a debt consolidation service, it is offered exclusively through the lender. This method may reduce the amount of interest paid on the student loan. However, this is not like a settlement. The loan principal is not reduced. The advantage of this student loan repayment option is that the borrower only has to make one payment, instead of several.

Student Loan Deferment

Deferring a student loan is a way of extending the grace period before beginning to pay back the loan. Deferments are not available to all individuals. The loan recipient must fill out an application for this service. Lack of income, reduced income, or continuation of education are typical reasons to file for a deferment. Depending on the lending institution and the type of loan, interest may or may not be accrued during this period. Some lenders may also allow repayment of interest only the duration of the deferment period. The monthly loan payment must be made until the individual receives a decision.

Employer Paid Loans

Depending on the area of study and whether or not the individual has successfully completed their education, some employers may pay back the student loan. In addition, particular professions may allow for partial loan and/or interest forgiveness. This will also depend on the state in which the borrower resides. School teachers, nurses, and attorneys are most likely to fall into this category, however, the individual programs may not be strictly limited to these professions. The individual must check to see if they are eligible for this program. Terms of eligibility are usually found on the specific state government financial aid web pages or may be obtained by the financial aid counselor at the school.

Failure to pay back student loans can result in wage garnishment, tax payments being withheld, and the inability to return to school. Those having financial difficulty should speak with the lending institution, more often than not, they are willing to help. Several lending institutions may offer a variety of other programs to assist in the repayment of student loans.