Repayment Options Abound for Those Consolidating Student Loans This Year

[Jun 11, 2007.]

College graduates who choose to consolidate their student loans this year have a number of repayment options from which to choose. The sheer variety can be mind-boggling to the uninitiated. However, with some quick study, you should be able to find the repayment option that's best for you.

One tried-and-true option is the equal payments approach. This enables you to make equal monthly payments over the length of your loan. If you think the simple approach is best, you may be most satisfied with this repayment method.

The select 2/graduated payment approach permits interest-only payments for the initial two years of repayment. In year three, the payments balloon to include the principal and remain at this level for the remaining life of the loan.

In the select 5/graduated payment plan, you'll pay interest only for the first two years of your loan. In years three through five, you'll also pay a portion of the principal. After that, you'll be paying a higher percentage of principal along with the standard interest payment.

Another creative option is income-sensitive payments. With this plan, your payments will be adjusted yearly on the basis of your expected monthly gross income. Or you might consider some form of extended payment plan. In such a case, you can expand your payments to cover 30 years. You may either elect to make equal payments or opt for a graduated payment plan. In order to qualify for an extended repayment plan, you must have more than $30,000 in student loans. The length of time you're allotted for repayment depends on your total balance—not only of the loans you're consolidating, but of any other educational loans you might have.

Given the rising price of fuel, the sluggish real estate market, and inflationary fears, consolidating student loans may be a wise financial move. The cash you save can be used for dealing with the myriad of other household expenses that come your way.

Julie Ann Amos
June 11th 2007
More Information:

• Debt Consolidation - What Are The Options?
  Having a lot of debt is not uncommon today, and for many, it seems that knowing how to get out of debt is just about as uncommon, too. If you have a lot of debt and want to find some relief, there are a number of options that may be available to you.


• Need To Consolidate Your Debt? - Get A Personal Loan?
  When you find that the monthly payments you make on your debts are getting to be more than you can handle - it is time to do something about it. Or, if you are having late charges being added because you simply are not getting paid enough - or at a time convenient to make the payments.

• Student Loan Consolidation an Attractive Option This Summer
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• Lawyers Join the Debate Over Student Loan Industry Practices
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• Lessons in Managing Student Loans
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