How Does Student Loan Interest Work?

Several months before graduating from college, I and a group of my classmates gathered in one of the prettiest rooms on campus. On this particular day, the room was filled with financial aid office employees poised to give lots of boring PowerPoint presentations.

Each of us were handed a shiny, new folder with a photo of a college senior in a cap and gown, holding a diploma. I remember looking at that photo and thinking, “I made it!”

Then I opened the folder and saw that the inside pocket was filled with papers listing all the loans I had taken out over the previous four years. Instead of listening to what the nice financial aid people were talking about during the hour-long presentation, I sat there and added up my total student debt amount. When I left the room that day, it felt like I had a $36,000 monkey on my back.

The amount owed was given to me in understandable, black-and-white numbers: $36,000. However, this was just the principal. Understanding the interest that was being charged and coming to grips with how much interest I would be paying over the course of the loan payoff was complicated and painful.

I had no idea how student loan interest worked the day that I entered that financial exit interview, but I would like that to not be the case for you.

Below, I’ll help you answer the question “how does student loan interest work?” based on my own experience paying off over $40,000 of student loan principal and interest charges:

Federal Vs. Private Student Loan Interest Rates

The first thing you want to do is to divide up your student loans into two categories: federal and private. This is because these two types of loans are treated differently in a variety of ways (such as in the consolidation process, repayment options, and interest accruement.

Federal student loans are sourced through the US Department of Education and will be called Direct Subsidized Loans and Direct Unsubsidized Loans, Direct PLUS loans, or Federal Perkins Loans. Private student loans are sourced from banks, credit unions, state agencies, or your school itself.

The interest rates on federal student loans are prescribed by law and are usually no higher than 8%. There are no limits on interest rates for private student loans, which means they can vary depending on the lender and the borrower.

Several months before graduating from college, I and a group of my classmates gathered in one of the prettiest rooms on campus. On this particular day, the room was filled with financial aid office employees poised to give lots of boring PowerPoint presentations.

Each of us were handed a shiny, new folder with a photo of a college senior in a cap and gown, holding a diploma. I remember looking at that photo and thinking, “I made it!”

Then I opened the folder and saw that the inside pocket was filled with papers listing all the loans I had taken out over the previous four years. Instead of listening to what the nice financial aid people were talking about during the hour-long presentation, I sat there and added up my total student debt amount. When I left the room that day, it felt like I had a $36,000 monkey on my back.

The amount owed was given to me in understandable, black-and-white numbers: $36,000. However, this was just the principal. Understanding the interest that was being charged and coming to grips with how much interest I would be paying over the course of the loan payoff was complicated and painful.

I had no idea how student loan interest worked the day that I entered that financial exit interview, but I would like that to not be the case for you.

Below, I’ll help you answer the question “how does student loan interest work?” based on my own experience paying off over $40,000 of student loan principal and interest charges:

Federal Vs. Private Student Loan Interest Rates

The first thing you want to do is to divide up your student loans into two categories: federal and private. This is because these two types of loans are treated differently in a variety of ways (such as in the consolidation process, repayment options, and interest accruement.

Federal student loans are sourced through the US Department of Education and will be called Direct Subsidized Loans and Direct Unsubsidized Loans, Direct PLUS loans, or Federal Perkins Loans. Private student loans are sourced from banks, credit unions, state agencies, or your school itself.

The interest rates on federal Education Loan Calculator are prescribed by law and are usually no higher than 8%. There are no limits on interest rates for private student loans, which means they can vary depending on the lender and the borrower.

Source : http://blog.readyforzero.com/how-does-student-loan-interest-work/#.Vk7w_dIrLDd

Paying off Education Loan in India

Education is perhaps an individual’s most precious resource today. In fact, nowadays education is at times equated to an investment, which in all truth it is. However, if we purely take perspective at education as an investment point of view, the price of education at times requires you to take loans from banks or other sources, which require you to pay off the debt after your “investment” or education starts bearing fruits. As easy as loan grant sounds, the more difficult it can be to pay off. However with careful planning and timely repayments, one prevents himself/herself from coming under what is called “debt pressure”.

Should you prepay your education loan?

Education loan is basically an amount bank has paid on your behalf. So with every passing day, this loan accrues some interest. You pay this loan in EMIs because you cannot pay off all the loan amount i.e. principal and interest at one go. So one way to limit the interest that you will pay on education loan is to pay it off as early as possible. But education loan also helps you save Tax under section 80E. We have created an excel sheet that will help you decide when to pay off the education loan.

If you cannot prepay the loan, follow these tips while paying EMI on the education loans in India:

1)  Start Early:

Don’t wait till your graduation, to start planning on the repayment. Have a repayment model ready as soon as the first phase of education (generally the first semester) is over. This will enable you start saving early and gradually ease off the pressure of the interest which piles up and by the time of moratorium period ends, you would have already started with the repayment. If you have some savings already in your account when you graduate, you could start paying the loan even before the moratorium period begins. Do keep in mind that your loan is accruing interest even during the moratorium period.

2) Set a comfortable EMI. Don’t be over ambitious:

Setting a lower EMI for a longer duration might just be a better option than ambitiously trying to pay off the loan early. Paying off the loan early is always the better option, but not by compromising on other important needs like lifestyle expenses or training costs for furthering professional skills.

3) Prefer a loan from Government Bank (or PSU Banks):

PSU banks typically offer loans at lower rates than private banks. They are also more lenient when it comes to prepayment of the loan. E.g. Andhra bank does not levy any charges for partial or full repayment while HDFC banks charges penalty proportionate to the amount of loan outstanding.

4) Speed up the repayment using the tax benefits:

Education loans provide you tax benefits and the amount that you save can actually be used quite significantly for paying off your debt faster. One way to do this is calculate the amount that you save exclusively from taxes and deposit it biweekly along with the ongoing EMI. This might seem insignificant in the short run but saves you almost 3-4 months during the final payment which results into about 25-30% lesser interest being paid.

5) This is the best of all strategies. Even if you add ~100 extra every month for just 2 years consistently, you can save up to ~20,000 in interest and you will end up finishing an 110 month loan in 106-107 months saving 4 months.

6) Pay off some part using bonus:

Every year, you will get bonus at the end of the year. You can use this bonus to pay off part of your loan.

The key is to plan and stick to the model that you have decided. Once you are earning in lakhs, a few thousands in the long run won’t matter.

Calculate when to pay off your education loan

Once you take the Education Loan Calculator India, you have to start planning how you would pay it off. Should you wait for the entire loan tenure or pay it off before that? How much money will you save and how much tax benefit will you forgo? And as such how much tax would you save through this loan?

1)  A1-11 are input cells. Enter the details of the loan you have taken here.

2)  Once you enter the data, you will see that excel will calculate the formulae and fill the columns E to L with data.

3)  Column G indicates the tax you would save every month if you keep paying EMIs.

4)   Column H indicates the total value of the entire tax benefit you would forgo if you pay off the loan in corresponding month. This is basically the current value of all the tax savings you would have got in the future.

5)  Column I is the prepayment penalty for paying off the loan.

6)   Column L is money saved by paying off the loan early.

7)   There are two graphs that show money saved if you pay early. The first graph shows two lines rad and blue. Actual money saved is the difference between these two lines.

8) The graphs clearly show that you would get maximum benefit by paying off the loan as early as possible. i.e. the tax benefit forgone and prepayment penalty by paying off the loan does not exceed the interest saved by paying off the loan.

Source : http://freefincal.com/paying-off-education-loan-in-india/

New Features: Student Loan Calculators

We just launched 6 new student loan calculators to help you save money while paying off your student loans!

Why did we create these student loan calculators? So far, we’ve provided lots of great content, strategies, and tips on repaying your student loans, like this blog post: “10 Questions to Ask Before Refinancing Your Student Loans”, but it is hard to translate education and content into decisions without doing the math to understand the financial impact.

We believe our student loan calculators can help you build a student loan repayment strategy that saves you money, time, and frustration.

Without further ado, here are the 6 new student loan calculators:

1) Student Loan Comparison Calculator

The student loan comparison calculator is great for current college students who need to compare in-school student loans and graduates who want to compare student loan refinancing offers. You can compare multiple student loans side by side to help identify the total financial impact before making a big financial decision

2) Student Loan Prepayment Calculator

Want to payoff your student loans early? The student loan prepayment calculator solves for how much in extra payments you will need to pay to get out of debt by X date. For example, imagine you currently have a 20 year repayment term on $45,000 of student debt and you want to payoff your student loans in 10 years. By increasing your monthly payment by $177, you will payoff your student loans in 10 years and save $19,932 in interest.

3) Student Loan Refinancing Calculator

Refinancing your student loans can be a big money saver, both in the short term and long term. Depending on the new student loan term and rate, you can effectively lower monthly payments and reduce the total interest you will pay over the lifetime. Use the student loan refinancing calculator to see how much you will save. For example, if you have $45,000 in student debt at 8.5% interest rate, and you refinance the total debt amount at 5%, you will lower monthly payments by $80/month and save over $9,600!

4) Student Loan Deferment Calculator

Need to put your student loan payments on pause? With student loan deferment you cause pause your student loans for up to 3 years depending on the loan type. Keep in mind, most instances when you enter into student loan deferment you will accrue interest on your student loans during this time period. The student loan deferment calculator will calculate the total interest you will accrue during deferment.

5) Student Loan Payoff vs. Invest Calculator

Have some extra money left over at the end of the month? The student loan prepayment calculator calculates if it is wiser to invest or prepay your student loans with any additional payments you might be able to make with free cash at the end of month. Even an extra $50-$100/month can have a huge financial impact on your student loans and investments! The general rule of thumb is that it is wiser to contribute your extra free cash to the highest interest rate product. For example, if your student loan has an 8% interest rate, and you found an investment opportunity that yields 6% interest return, you should focus on paying off your student loans rather than investing

6) Student Loan Payment Calculator

Still in school or recently graduate and want to know how much your future monthly payments and interest will be? The Education loan payment calculator answers these questions and helps you decide if this is an investment (student debt) that you can afford.

Source  : http://studentloanhero.com/featured/student-loan-calculators/

Education Loan Calculator India : The finance formula, How to manage finances while studying abroad

Education Loan Calculator India : The finance formula, How to manage finances while studying abroad from Rahul Singh

3 Student Loan Calculators That Can Help Save You Thousands

Seven in 10 college graduates in 2015 have some student loans when they graduate. So, unless you’re one of those lucky few, student loans are likely to be a part of your monthly expenses upon graduation. Fortunately, there are many student loan repayment calculators that can help ease the payoff process.

Borrowers are often unsure about what their payments will be or how long repayment will likely take. Here are three great student loan calculators for student loan borrowers to learn more about their payment and payoff options.

Top 3 Student Loan Calculators

Student Loan Payoff Calculator

Is a very quick way for students getting a loan for the first time or borrowers who have not entered into repayment yet.

Allows a borrower to see how much their payment will be depending on the interest and length of the loan.

Once a borrower puts in his or hers loans, the amount of interest paid will be displayed. This can be very useful to help see how much you could save by refinancing.

Student Loan Repayment Calculator

Several student loan calculators offered by You Can Deal With It are focused on eliminating student debt.

Student loan repayment calculator that shows how much you would likely pay on various federal income-based repayment plans.

Has a student debt calculator that compares how long it would take to pay off your loans with current payments and with additional (prepaying) payments.

Other calculators include, budget calculators, interest rate calculators and student loan consolidation calculators.

Student Loan Consolidation Calculator

This calculator offered by FinAid is intended to show borrowers how they can consolidate multiple loans into one loan.

It allows borrowers to enter in various student loan types including private loans, federal loans and PLUS loans. However, private loans can only be added to a private consolidation.

Consolidation calculator shows what payments and terms would be if they were consolidated into one loan.

Results generate repayment and estimated required income on a standard 10-year term, an extended repayment of 20 years and a graduated repayment program of 20 years.

Methods of Paying off Student Loans

As the Education Loan Calculator India  propose, there are several repayment strategies that can be adopted to help pay off your student loans faster. Seeing how prepayment can help reduce your total interest paid is one method that should be explored if you are the right financial state. Consolidation is a great way to ease the repayment process and adjust the term length of your loans accordingly. If you have federal or federal and private loans, though, refinancing is a great way to lower your interest rate and change your repayment terms completely as well as maximize for a lower monthly payment or a lower total repayment.

Source: https://educationloancalculator.wordpress.com/2015/11/02/3-student-loan-calculators-that-can-help-save-you-thousands/

Average sanctioned amount of education loans growing in India: Cibil COO

MANGALURU: Credit Information Bureau (India) Ltd has released data trends report that throws light on education loans. This reveals that while demand for educational loan is need based, number of new accounts opened in calendar year is almost same over last 5 years. However, average sanctioned amount continues to grow over time. As on March 31, outstanding education credit reported to Cibil, including for loans to study India stood at Rs 63800 crore.

Releasing the report, Harshala Chandorkar, chief operating officer, Cibil told reporters on Tuesday that, "Like any other loan, it is vital to know that education loan is credit facility provided to help one pursue higher education. Loans have to be paid once one completes their course and gains employment. Like any other loans and credit cards, education loans are reported to Cibil and get reflected in borrower's Cibil report and impact Cibil TransUnion Score".

Duly paying your education loan low interest installments on time, each month, is the best thing that could be done to maintain a healthy Cibil report and a good Cibil TransUnion Score, Harshala maintained. The Cibil TransUnion Score and Cibil Report have become one of the most important parameters for credit institutions to make lending decisions. Cibil data also indicates that more than 90% of new credit is sanctioned to borrowers above a score of 750.

Banks and financial institutions today consider the score as a crucial parameter before sanctioning any new loan. It is important that borrowers therefore access their Cibil Report and Cibil TransUnion Score regularly to assess their own creditworthiness. About 130,000 education loan accounts were opened in Q4 2014. Average sanctioned education loan amount in fourth quarter of 2014 was Rs 6 lakhs, while in the same period of 2013 it was about 4.5 lakhs, she said.

Source: (https://educationloancalculator.wordpress.com/?p=32&preview=true&preview_id=32)

Student Loan Calculator Is Brutally Honest About Law School

We can write about how financially imprudent it is to go to law school until we’re blue in the… fingertips? I guess? But for some of you, it’s just not going to sink in until you see it in cold hard numbers. Enter this handy student loan calculator that allows the user to enter their planned indebtedness and it’ll spit back the salary you need to earn in order to justify your decision.

Spoiler: law school is rarely justified…

Recently, The Washington Post published a education loan payment calculator to assist students out there in figuring out exactly how much they will suffer for their education. And the answer for lawyers is “much more than they can afford.”

Try it out for yourself.

Let’s try an example. First off, let’s assume the student is carrying zero debt from undergrad. This is probably unrealistic, but maybe they played it smart and went to a state school before attending an elite law school (JoePa pats himself on the back). Or maybe they’re super rich. In any event, let’s judge the law school decision assuming this is the only student debt they’ll have.

Let’s also skip over cost of living. Not because cost of living isn’t important, but because this calculator demonstrates that law school is a bad investment for most students even before we consider cost of living.

For the fun of it, let’s take the JoePa path, heading to NYU Law with zero undergrad debt. To do this today, the JoePa clone would rack up $171,087 in debt per Law School Transparency. What would need to happen to pay off those loans….

To meet the magical $160K, the calculator requires a 15-year payback schedule of $238,111, including interest. Obviously, Biglaw attorneys have the advantage of annual salary increases that help stem the suffering. In most Biglaw firms, the associate will be making that $214K number — when you add in bonuses — by their 4th year. But then the prospective lawyer will need to consider the pyramid scheme of legal practice. It’s not all that valuable to earn $250K as a 5th year if you’ll be out on your ass as a 7th year.

There are ways to manage this situation. A disciplined attorney could kiss every bonus goodbye and make giant lump-sum payments to pay off principal and change the landscape. Or the student could go pass on NYU and get in-state tuition somewhere. But this is also fraught with risk because with lower tuition comes lower post-graduate opportunities. For example, in-state tuition at Ohio State lands a student $88,917 in the hole, but OSU boasts a 59.1 percent employment score compared to NYU’s 93.7 percent.

Once again, this is the overarching cancer of the law school industrial complex: it incentivizes big debt and Biglaw dependence. The next time you hear some do-gooder complain that the federal judiciary is too stacked with Biglaw refugees who lack hands-on experience representing the indigent, what they overlook is how the top-tier law schools all but guarantee that the pool of candidates for future judicial appointments are forced to work in Biglaw to make ends meet. If these people want to increase the diversity of experiences on the federal bench, they need to step back from criticizing judicial nominations and start reforming the law school process.

Source : http://abovethelaw.com/2014/10/student-loan-calculator-is-brutally-honest-about-law-school/

Dealing With Student Loan Payments

Different Settlement Possibilities

Most student loan corporations allow college students to the so to speak in a number of techniques. While many start on an ordinary 10 season bank loan payment program, others swiftly alter the payment program as a result of fiscal factors. That typically requires more than a few months to discover a full-time employment right after institution. That places several graduates within a nerve-racking circumstances simply because lack ample profits to the financial loans. On this circumstances, nearly all graduates are eventually left to consider some other payment policy for the personalized circumstances.

1 type of payment program giving is a managed to graduate program. This course of action makes it possible for graduates the ability to cover a lesser payment for the initial several a long time. Eventually, this move on has got to pay a little total additional on a monthly basis. That is intended in a manner that presumes this university student will certainly earn more money as time passes, since she or he can obtain a more satisfactory job as a result of amount. That is only 1 type of student loan obligations program that means it is simpler with regard to graduates to the credit card debt.

Quite a few Loan companies

There's a handful of unique student loan corporations which are federally controlled. It will help to guard college students as well as makes it possible for several college students to never have to pay the credit card debt off even though they are however with institution. Most college students try and employ the most famous lenders so that they feel safe and sound. These are usually the corporations that supply the very best rates of interest. There are many others that supply so to speak to help both equally college students and the mother and father.

Some college students will need so much dollars with regards to education, actually in addition required to obtain personal financial loans. It is because based on federal student loan attractions, she or he may well just qualify for a great number of financial loans. Fortunately, there are various others that will guide college students find the dollars that they can will need.

Unfortunately, a number of these lenders help to make college students start paying off the bank loan credit card debt even though they are however planning to institution. This can be particularly aggravating for many people college students, since they need to stress about planning to institution even though in addition doing the job some sort of full-time employment. Quite a few college students stress about paying off the student loan obligations even though attending institution.

Determing the best Rate

After looking into your alternatives, you'll find a large number of costs are very common. Which means nearly all corporations will offer you a really equivalent rate. It really is however in your best awareness to look a much better interest. This will find yourself saving you 100s and even a lot of money ultimately,

After you start creating student loan obligations, take advantage of money-saving prospects. As an example, several lenders allow some sort of move on to reduce his or her interest by means of paying out on time for just a substantial period of time. Other companies allow graduates to reduce the rate just by permitting the student loan obligations to help immediately emerge from the bank account. This can be a great option for many people college students, simply because is not going to have to stress about arranging the payment on a monthly basis, and they're going to in addition be capable of save slightly dollars on a monthly basis because of the low interest.

Don't forget money-saving prospects. This will permit you to have an overabundance of profit ones pocket on your different bills. You could possibly swiftly discover you will want to consider committing to a flat, residence, or car.

Learning to Cope with Almost all Costs

It is usually hard for many people graduates to help learn to harmony their fiscal responsibilities. Many college students will not do the job even though that they enroll in school, thus they are certainly not used to creating typical monthly bills on costs. As soon as a student graduates, they are eventually left not to ever just discover a employment, but deal with several brand-new fiscal responsibilities.

It is vital that the move on looks at the student loan obligations before saying yes to help different fiscal prospects. In case a university student is not careful, she or he may well warning a flat lease that is too costly. That can make it extremely hard to cover bills and rent in addition to student loan obligations.

This is why it is good for college students to be effective some sort of part-time employment in the course of institution. Not only may this allow them to have a few added to spend, but it could teach college students how you can much better handle the finances. In case a university student is sensible ample, she or he will likely figure out how to save a little bit of dollars on a monthly basis. That dollars could help a student away a good deal right after graduating. Quite a few college students are unable to save simply because don't understand the fact that this. In case a university student may spend less whilst in institution, it could allow the university student to live somewhat more in a relaxed manner right after graduating.

It is vital with regard to college students and the mother and father to do right study before committing to just about any so to speak. This will allow them to obtain the best bank loan achievable. It will make certain that this university student and his or her mother and father in addition fully grasp almost all aspects of this loan's conditions. If you have not a full understanding, there is several hidden expenses which could find yourself being this university student a lot of money sometime soon. Take the time to very carefully think about almost all student loan choices. You will find that you can discover a Education loan payment calculator  that will fits your requirements and has an inexpensive payment program.

In case you opt for very carefully, it is possible to ones student loan obligations with adequate time and will not be stuck paying out ones student loan obligations for the remainder you have ever had.

Furthermore, there may be so much to learn when you obtain primary student loan. It really is great to have a internet site you will get plenty of details almost all in one area.

Source:http://www.loan-payment-calculator.com/2015/04/dealing-with-student-loan-payments.html

Why You Should Use a Student Loan Interest Calculator While in School

Nearly all student loans have options to defer payments while attending college; however, making payments on your student loans while still in school can save you thousands of dollars just by the time you graduate. Here’s what you need to know about making payments on student loans while still in college and some student loan interest calculators that can help.

Subsidized vs. Unsubsidized

Subsidized student loans are federal loans that the government pays the interest on while the student is still attending college. These loans are granted to students who meet certain financial qualifications. On the other hand unsubsidized student loan and private student loans accrue interest while the student is in school.

Compounding Interest

Although students are not required to pay on their student loans while in college, interest on those loans still accrues, which means that each month interest is owed on your loan is added to your principal balance. The interest due is compounded onto the loan quarterly. So every three months the outstanding interest balance is added onto the principal balance.

With your interest rates compounding it can make your loan balance balloon. After graduating your loan will be thousands more than the initial balance and you will end up paying much more for your loan. Paying the interest while attending school will help you to avoid this situation.

Another benefit is that interest paid on student loans is tax deductible. Each year when you file your taxes you can write-off up to $2500 worth of student loan interest payments.

Student Loan Interest Calculators

There are calculators available on the Internet that will show you how much money you will save by paying on your interest while attending school. Here are a couple of calculators to look at:

Interest Savings Calculator

• With the interest savings calculator by You Can Deal With It, you can enter up to 8 different loans.
• It compares the interest you will pay on the loan if you do or don’t make payments while attending school.
• It shows you the total amount of money you could save and how much your monthly payment could be reduced.

Student Loan Deferment Calculator

• Deferment Calculator by Fin Aid to input all of your original loan details: original principal balance, payment, interest rate, loan term and how frequently the interest compounds.
• It then calculates how much interest will be charged on the loan during the time of deferment.
• It shows you what your new balance will be when you enter into repayment. Also the difference in interest if you made payments while in school.

What should I do?

Speak with your student loan provider, private or federal, about how much interest is charged on your loan monthly. Some private lenders actually offer lower interest rates to borrowers who intend to pay while in school. This is a very favourable option as you can save on your actual interest rate and total repayment.

If you can, saving on education loan interest calculator  and being proactive about how much you could save by paying while in school is always a good idea. Look into your financial situation; what you can afford, use a student loan interest calculator and make decisions that can help reduce your total debt.

If you want to explore your private loan options, visit :  education loan interest calculator

Source:https://www.credible.com/blog/student-lending/why-you-should-use-a-student-loan-interest-calculator-while-in-school/

A Beginner’s Guide to Repaying Student Loans

One critical piece of information you need: Who is the so-called service that will collect your payments each month on behalf of the federal government? You may have more than one, and you’ll want to know how to contact them to ask any questions you may have about your payments.

In her book “Cliffs Notes Graduation Debt,” Reyna Gobble suggests starting a simple spreadsheet to track every loan. For people who need to track down all of their private loans from non government lenders, she suggests they should get copies 

from compartmentalization of all three of their credit reports. These loans should show up on at least one report, though not all loans may be on all of the reports.

WHEN AND TO WHOM 

The first payments on your loans may be due at different times. Some federal loans give you a six-month grace period after you graduate while others give you nine months. With private loans, it varies.
Assume here (and really, everywhere throughout this process) that services will fail to find you and give you clear repayment instructions before the first payment is due. If you’ve moved or changed your email address since you took out your first loan and haven’t told the services about it, be especially vigilant. Also, have user names and passwords at the ready so you can check accounts online and call if you need more information.

When you do pay, you may be able to send in one check even if you have multiple loans from multiple years with one service. Find out, as it can save you some hassle. Then check to make sure the service is crediting the payment properly to every loan.

The Education loan calculator fails to account for the fact that un subsidized loans accrue interest while the student is in school. This is a...This country needs to teach high school students a basic life course on money management. Many people do not realize co-signing a loan

Thanks for mentioning the "bad actors" The thing I dislike most about fed student loans is that unlike other financial products, there is... Having the services pull the monthly payment from your checking account automatically can spare you some effort and risk, but that works only for people with regular sources of income who won’t bounce the payments for lack of bank funds. Again, check for problems. Sometimes the direct debits don’t start in the month they’re supposed to.

TAKING LONGER

The normal repayment period for federal student loans is 10 years. But depending on the loan and the balance, you may be able to lower your monthly payments by taking as long as 30 years to pay them off.
There are several ways to do this. One is through something called extended. Loan consolidation, where you combine many loans into a single one, is yet another possibility. If you want to consolidate all of your loans, make sure you don’t forget one. You can also enroll in a graduated payment program while in consolidation (and in some other circumstances) that allows you to pay increasing amounts over time.
The big downside to taking more than a decade to pay is that the total interest costs can be much higher. The Student Loan Borrower Assistance Project of the National Consumer Law Center has an extensive guide to loan consolidation on its website that outlines these and other trade-offs.

INCOME-DRIVEN REPAYMENT 

For people without much income, there are several government programs that set payments on federal student loans based on how much money you make. You can see a list of them on the right side of the Department of Education’s main income-based repayment web page. To see what your payment might be under the plans, visit its repayment estimator page. Your services will determine whether your income is low enough to make you eligible.

The income-driven payments may cause you to spend more on interest over time than you might have otherwise. Under certain circumstances, the federal government may eventually forgive the debt after a number of years as well.

The income-driven payments may cause you to spend more on interest over time than you might have otherwise. Under certain circumstances, the federal government may eventually forgive the debt after a number of years as well.

Sallie Mae, which said earlier this year that “nearly” 85 percent of its federal and private loan customers who were supposed to be making monthly payments were in fact up-to-date, offers one additional tip: If you’re confused or having trouble making payments, talk to your servicer

Source :http://www.nytimes.com/2014/05/17/your-money/paying-for-college/a-beginners-guide-to-repaying-student-loans.html

When Student-Loan Payments Come Due

Alexandra Langley is no stranger to compromises. The 22-year-old, who graduated from Nebraska Wesleyan University in Lincoln, Neb., in May, worked 20 hours a week at a child-advocacy non profit as part of her financial-aid package, on top of her full-time studies. Ms. Langley then chose to forgo a potentially high-paying career path to focus on her passion for public policy at a Washington, D.C., think tank, earning $33,000 a year in a city where dollars don’t stretch very far.

This month, as the six-month grace period on her federal and private student loans ends, Ms. Langley will start chipping away at the more than $50,000 she owes, making monthly $500 payments.

“I make daily compromises without even having to make my student-loan payments yet, so I can only imagine what it’s going to be like” once the payments begin, she says. Ms. Langley already scrimps on expenses by limiting grocery shopping and sacrificing holiday visits home.

She is far from alone. About 41 million borrowers had federal or private student loans outstanding at the end of June, according to Edvisors.com, a Las Vegas-based college financial-aid website. Student-loan debt totals about $1.2 trillion. Many borrowers will be saddled with the debt well into middle age, or later.

The federal government has made some effort to ease the burden on grads.

President Barrack announced in June an expansion of the Pay as You Earn Repayment Plan, which is geared to borrowers with low incomes relative to their overall federal student-loan debt. The program lowers borrowers’ monthly payments and provides an opportunity for forgiveness on part of the debt after many years of payments.

There are steps you can take to minimize the pain of beginning to repay your student loans. Here’s how to get a jump on the process:

Know your loans. Staying organized is critical, says Jodi Okun,founder of College Financial Aid Advisors in Seal Beach, Calif. Gather all your loan information in one place, including the lender, balance, repayment status and account number for each loan, and whether the loan accrues interest while you’re in school (ask your lender if you’re not sure), Ms. Okun says. Also be sure to note when your first payment is due for each loan, she says.

Research repayment options. For federal student loans, you’ll be enrolled by default in a standard payment plan, Ms. Okun says. But there are typically other options, such as income-based plans, she says, so be sure to explore the alternatives.

Ms. Langley of Washington, D.C., for example, says she plans to enroll in an income-based repayment plan, which would cap her monthly student-loan payment at 15% of her discretionary income (what’s left after taxes and essentials like food)—but would tack on a longer repayment timetable, causing her to accrue more interest and ultimately pay a higher total amount.

Triage. Pay off the loan(s) with the highest interest rate first, and move down from there, Ms. Okun says.

Consider consolidation. If you have several loans with various rates, consider whether consolidating them is the right move for you, Ms. Okun says. Consolidating refers to the process of combining like loans (federal with federal, for example) into a single monthly payment with a fixed interest rate, she says. But be aware that your interest rate could rise if you consolidate, she says, so you’ll want to crunch the numbers with an Study loan calculator, such as the one at discover.com/student-loans. Consolidated federal rates typically reflect a weighted average of your individual rates, but consolidated private rates typically depend on the borrower’s credit score, as well as market conditions.

A little extra. If you can make more than the minimum monthly payment without stretching yourself too thin, it’s a good idea to do so, Ms. Okun says.

“Just adding a small payment of $25 to the minimum each month can make a huge difference in loan length and cut down on interest,” she says.

For example, if a student’s loans total $17,000 with varying interest rates, paying $25 more than the minimum each month could save a student close to $2,500 in interest and cut the repayment term by at least a year, Ms. Okun says.

Communicate with your lender. If you’ve hit a rough spot, your lender will likely work with you to set up a feasible repayment plan, Ms. Okun says—so be sure to keep lines of communication open.

For example, if you’re a recent grad having trouble finding a job, Ms. Okun suggests calling your lender to ask, “I’m not employed and my grace period is ending—what are my options?”

Source : http://www.wsj.com/articles/when-student-loan-payments-come-due-1415495096