Paying off Student Debt.

Coruja_da_filosofiaWhile most people think of college planning this time of year meaning the beginning of college, what are your payment options for student debt once you’ve graduated?

Student debt that you have under the present day Federal programs is NOT the same as private debt most people are familiar with. The Consumer Financial Protection Bureau (CFPB) has a resource site to help you understand these differences and various basic options with education related debt.

Once you understand basic options, you want to successfully manage that debt. The Federal Student Aid site has excellent resources to understand your loans and options. Mapping your Future.org has an easy to use list of things to consider to properly manage this debt. The goal is to keep your credit history in good order while knowing and following rules and options.

Mapping your Future’s debt calculator tells you how much you should expect to pay (as an estimate while you’re still in school) AND provides a handy estimate of the minimum salary you should have to make these payments. Of course, if you’ve graduated, then you’ll know how much you need to pay as determined by your debt servicer. The Federal Student Aid website also has a repayment estimator calculator. This calculator reverses the assumptions from the first one above in that you input your income and debts to derive the various payment plan options and their monthly payments. Which calculator should you use? If still a student, then your income is not really known so use the first so you get an idea what kind of income you should be looking for to properly repay our debt. If you’re graduated and know your income, the Repayment Estimator calculator from the Federal site gives you the range of repayment options for which you may be eligible.

Can you design the repayment around your income? Yes! The repayment estimator calculator lists the names of various repayment plans and this page on Federal Student Aid website describes the various repayment plan options with links to each one for more information. Use the repayment estimator calculator with the repayment plan options together since the calculator gives you a payment estimate while the plan descriptions pages help you understand the details. As to plans that are income based, there are currently two kinds: Income Driven or Income Sensitive.

The moral of the story: Federal loans have many options for repayment and which may be right for you depends on our situation and circumstances. Private loans are contracts with the lender and don’t have options unless they’re written into the loan agreement (unlikely). Finally, The CFPB posted this … Consumer Advisory: Student loan debt relief companies may cost you thousands of dollars and drive you further into debt. This advisory discusses options you may have especially if you’re feeling pressured or falling behind with payments. Between the two Federal sites, Federal Student Aid and the Consumer Advisory, you have at your disposal great resources to help you navigate repayment of your student loans.

Photo By Jose Antonio da Conceição (Recorte de imagem da internet) [CC0], via Wikimedia Commons

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