Paying Off Student Loan? Repayment Options You Should Consider

By Susan Tompor
Detroit Free Press

WWR Article Summary (tl;dr) As columnist Susan Tompor points out, “While some, budget-friendly plans make sense to help you avoid defaulting on your student loans, experts note that paying as little as you can in some cases could dig you deeper into a debt.”

Detroit Free Press

November marks a time to talk turkey about how to repay those student loans.

Are you looking for a way to keep the monthly payments as low as possible? Or a way to control your total debt?

Because honestly, you can’t have it both ways. Sort of like expecting to load up two plates on Thanksgiving, and drop 20 pounds by Monday.

College grads receive a six-month grace period before they have to start paying down their student loans. Getting a diploma in May means many will begin to repay those loans in November.

The real fun starts when you try to figure out what kind of repayment plan you might like to obtain for your federal student loans. You’re looking at eight different kinds of repayment plans.

While some, budget-friendly plans make sense to help you avoid defaulting on your student loans, experts note that paying as little as you can in some cases could dig you deeper into a debt.

“Students often focus on reducing that monthly payment as much as possible,” said Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.

“That actually increases your cost, and you’re going to be in debt longer.”

Low monthly payments stretch out debt

Consider someone who owes $30,000 in student loans. Assume a 5 percent rate.

Opting for a 10-year standard repayment plan would mean paying $318 a month and end up costing a total of $38,183.

What happens if you want to cut the monthly payments, say to $175 a month?

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