There are a lot of different ways to repay the student’s loan. Each process has its own set of advantages and disadvantages. 60% of the students are burdened by this loan and have borrowed more than $26,000 on average. There are a lot of ways to reduce the interest rate and other aspects of the payment.
Cut in the interest rate
Signing up for the monthly loan payment through automatic debit would reduce the interest rate by 0.25%. 0.25% might seem small but, there would be a considerable amount of decrease in the principal paid by the individual due to this cut in the interest rate.
Extension of repayment time
If you have more than 30 thousand dollars as loan, you can extend the repayment time up to 25 years. By extending the repayment time, the amount of money that has to be paid every month gets reduced.
There are a lot of programs which can be taken by the grad students, where they spend their time and energy and their loan gets paid to some extent. These income based repayment programs would help the individuals who have loan more than what they earn. This would help to put 10% of the income towards the loan for 20 years and the amount beyond this would be forgiven.
For instance, teaching low income students for four years might reduce the loan by four thousand dollars. However, if the student drops out of the repayment program before completing it, then he must repay the amount paid by the program along with the interest at the rate of 4.66%. In short, you would lose twice the amount you might have got by undergoing such programs.
In the US, generally, the interest for this loan would start accumulating after six months from graduation. However, from 2012, the interest starts immediately when the students enter the real world. Thus, it is important to choose one of the many different ways to pay off the loan, as soon as possible. If you are planning to start paying off the loan after a year, the interest would add a lot of financial pressure. Thus, it is better to start paying off the loan from the very first temporary job, you land.