various federal student loans, using the four different loan repayment plans:
The standard loan repayment plan, in which you pay a minimum of $50 a month and your payments last for up to 10 years;
The extended repayment option, which also requires monthly payments of at least $50, but which lets you pay off your educational loans over 12 to 30 years;
The graduated repayment program, which lasts from 12 to 30 years and allows you to pay as little as $25 a month;
The income contingent repayment plan, which permits you to pay as little as $5 a month and lasts for 25 years.
While it may sound like an attractive option to preserve your cash flow and select the plan that will let you pay the lowest monthly payment, beware of doing so. The longer payments are stretched out, the more youâ€™ll pay in interest. The best advice: To pay off the debt as quickly as possible, opt for the standard repayment plan, which will allow you to pay off your student loans in a decade or less. Alternatively, make extra payments on top of the normal monthly payment. Even if you can only afford to throw in an additional $25 or $50 a month, every extra little bit will help.
Youâ€™ve no doubt received offers to consolidate your student loans. If you do consolidate, do so wisely. Private loans and federal loans must be kept separate; they cannot be consolidated. Also, be careful which loans you roll into one bigger loan. Letâ€™s say you took out federal Perkins loans. In most cases you wouldnâ€™t want to combine a Perkins loan with other types of loans, because Perkins loans have better loan forgiveness benefits for people who go into teaching. Consolidating them with other loans may cause you to lose those bene
Though Gambrell had the bulk of her education paid for with grants, the college loans she did receive were federal, unsubsidized loans. With subsidized loans, the government pays the interest on the debt while students are in school. But with unsubsidized loans, that interest doesnâ€™t get paid by the government.
Once she graduated, Gambrell rolled her loans into one payment, consolidating them through the College Loan Corp. at a fixed interest rate of 2.87%. “I got very lucky,” Gambrell acknowledges. “At the time I graduated, jobs werenâ€™t plentiful, but student loan consolidation programs were very, very attractive.”
Help From Uncle Sam
Youâ€™ve heard of using OPMâ€”other peopleâ€™s moneyâ€”to invest or borrow, right? Well, when it comes to paying off student loans, thereâ€™s another OPM to look into: the Office of Personnel Management. This government department runs the Federal Student Loan Repayment Program. If you work for any federal agencyâ€”or even if youâ€™re unemployed and looking for a job or willing to switch jobsâ€”youâ€™ll want to seriously investigate this program. The OPMâ€™s student loan repayment program allows any federal organization you work for to pay off your student loans on your behalfâ€”to the tune of $10,000 a year, up to a maximum of $60,000. In