Recent Grad? It’s Payback Time.

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Remember that awesome graduation party you had, where you and all your friends wore those silly pointy hats?

Yeah, that was six months ago, which means now it’s time to pay up.

(Students who received federal Perkins loans have a nine-month grace period.) Many students may already have decided on a repayment plan. But if your career plans have changed since graduation, there’s still a little time to alter your repayments and make them work better for you.

Wonder whether there’s any way out of paying your student loans?  Read this.

Federal Loans – If you owe less than $30,000, the standard payment plan lasts 10 years, according to this guide by the U.S. Department of Education. Interest rates vary depending on which kind of loan you received, and when you first received it.  Use this chart to see how much your interest rate will be. The standard plan gives you the highest monthly payment, because it gives you the least amount of time to pay back the full amount of the loan, but it does keep your total interest payments low.

You also can get an extended repayment period for up to 25 years. This increases the amount of interest you’ll pay over time, but lowers your monthly bill.

Lenders also let you choose between fixed payments every month versus variable payments. The latter comes in two flavors:

  • One, called graduated repayment, starts out with low monthly payments that increase by a fixed amount every two years. Total repayment time is capped at ten years. During the final two years, when you’re paying the most, the payments are capped and can be no greater than three times the payment amount at the start of the loan.
  • The other payment type is income-based. People who choose this plan get 25 years to repay.  Monthly payments fluctuate with your income, and are designed to be affordable. For more information about these plans, check out the government’s guide here.

To figure out which plan is right for you, use the government’s loan calculator here.

Private Loans – With a private loan, your lender will give you various repayment plans. Like federal loans, some will offer 10-year to 25-year plans, with fixed or variable interest rates. Most offer a quarter-of-a-percent discount for borrowers who sign up for automatic withdrawal from their checking accounts, which could save a person with a 10-year loan of $20,000 about $500, according to a story by the Wall Street Journal.

Also, check out the Upromise program by Sallie Mae, where you can earn cash back on purchases from some retailers, and use that money to pay down your Sallie Mae loans. Learn more here.

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