Confronting Student Loans

It seems like a simple plan. Get into college. Obtain a degree. Find a job. Move out and get started with your new adult life. But, as you know, life’s simple plans are rarely all that simple. They become complicated. What you thought was a smooth path to success becomes disrupted by a calculus class or an impenetrable job market. These potholes can make the trip a bit uncomfortable at times, but, as they say, that’s life. However, when considering potential potholes along the way, how does $25,000 worth of student loan debt affect your path to success?

For recent spring graduates, student loans are slowly becoming a reality. As the six-month grace period draws to close, it’s time to start settling up with your lenders. But, even for those graduates who landed a job immediately, that’s no small feat. Student loans burden most college graduates. And, like any other type of debt, they need to be confronted.

Debt doesn’t have to cripple you. Even if you’ve had no luck in the job search, there is hope. Of course, the ideal situation would be finding a job that allows you to comfortably pay off your loans. But, then again, things are rarely that simple. Regardless, though, here are a few things to consider when confronting your student loans.

• Borrowers can request a deferral or forbearance, which suspends payments temporarily. Of course, if you can pay, you should. But, if times are that tough, this might be an option.

• An extended-payment option may be available and would make monthly payments smaller by increasing the loan term.

• Income-based repayment, if applicable, allows the borrower to pay based on his or her monthly discretionary income.

• As of July 1, all new federal student loans will come directly from the federal government. The move will eliminate fees paid to private banks that act as intermediaries, saving the government billions of dollars. The government expects to use much of the savings to boost the Federal Pell Grant Program for low-income students starting in 2013 and make it easier for some individuals to obtain grants instead of loans.