Personal Finance After College: Your Student Loan Debt Payment Plan

Graduation day is a wonderful experience for many college students, unfortunately, for many it carries with it the reality of college student loan debt.  After graduation day,  many students have the burden of dealing with the complexities of dealing with repaying educational loans.  Knowing how to approach repayment can help you do it in the most efficient, painless, cost-saving way.

Grace Periods

Grace periods are specific times when you are not expected to make payments on your college student loan debt.  All student loans carry a grace period.  Most grace periods extend through the time that you are still in college until graduation. Almost all federal student loans have extended grace periods.  The Stafford Loan carries a six month grace period and the Perkins Loan grace period lasts nine months post-graduation.  Private loans carry varying grace periods so it is good to check with each private company and find out how long the grace period lasts.  Additionally, grace periods can be extended for continuing students.  Knowing the length of the grace period associated with your student loans will help you plan your repayments in an organized way.

Monthly Payments

Once the grace period on your student loan has expired, you should plan to start making payments immediately.  Many students are only able to make minimum payments each month.  When a borrower defaults, or does not pay, they run the risk of significantly lowering their credit rating.  A good credit rating is required for any purchase, such as buying a house, car, or any other large ticket item. Also, if the monthly payments are overwhelming, you can speak with representatives to discusschanging the parameters of the repayment or granting you some deferment time.

Consolidating Student Loan Debt

For many post-grads, student loan debt consolidation is worth consideriation because of the simplicity of one single payment. Normally, the payment will be at one interest rate instead of several payments at varying interest rates.  It is important to consider lender fees, charges and origination fees. Other important considerations may include prepayment penalties, maximum interest rate possibilities (or loan caps), and the term of the loan (or how long you will be paying off the loan).  It is not a good idea to take out a a loan with prepayment fees, as this will eliminate the option of early termination of all of your student debt.   The best place to look for student loan consolidators is with large national banks or specific companies that focus on student loan consolidation specifically.

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