How To Repay Your Student Loans

How To Repay Your Student Loans
How To Repay Your Student Loans

The cost of tuition is going way up. According to financial aid organization, the average cost of a four-year degree has increased about six percent a year for the last six years. As a result, you or your parents have taken out some huge student loans to help get you through college.

Here’s what you need to know about paying that money back. Of course, when you’re out of school and looking for your first job, your student loans are the last thing you want to worry about. But for many, student loans can be a very large expense.

Thankfully, there are a few different repayment options to choose from, each with its own pros and cons. The standard repayment plan for student loans is a 10-year plan. Under this plan, you’ll make equal monthly payments over the course of 10 years. This is the quickest way to pay off your loans, but it can also be the most expensive option in the long run.



The first thing you need to know is what type of loan you have. Chances have you borrowed either a Stafford loan or a Perkins loan. These loans make up the majority of government spending. Stafford Loans can be subsidized or unsubsidized.

If you have a subsidized loan granted to students based on need, the government makes your interest payments while you’re enrolled in school.. Unsubsidized loans are available to almost every student, but you’re responsible for all of the accumulated interest. Perkins loans typically have lower interest rates and are always subsidized.


Who Do You Pay

It’s also important to know who currently holds your loan. The bank from whom you originally borrowed money might still hold your loan, but there’s a good chance your loan has been sold because banks often sell their loan portfolios. According to the Department of Education (, after you graduate or fall below half-time enrollment, you should receive a notice informing you of whom to pay.


How Much is it Going to Cost?

You have a minimum payment to make each month, which will be part interest and part principal. Your payment plan is between you and your lender. Sometimes there are multiple prearranged plans to choose from, and sometimes you have a little negotiating room. According to the Consumer Credit Counseling Service (, you can choose from plans such as:

  • Standard – The basic plan
  • Accelerated – Quick pay off
  • Graduated – Payments start low and increase over time
  • Extended – Extra-long payback

Your lender will help you make your payments in every way possible. However, the last thing they want is for you to default, which is the last thing you want. A default will start your postgraduate financial life on the wrong track. Imagine a world of bad credit, expensive loans and trouble getting credit.