Your four options for repaying student loans

It’s May and college campuses are filled with graduates walking down the aisle to claim their degrees. But for many, the pomp and circumstance means it’s also time to face student loan repayment. In fact, three out of four students leave school with some student loan debt.

 According to the Institute for College Access and Success, graduates face an average student debt of $28,400. The good news is that many loans come with a six-month grace period, so you can get on your feet before you need to start paying them back. But when it comes time to face the bill, it can be intimidating and confusing. Luckily, BetterMoneyHabits.com breaks down the options for student loan repayment.

Option 1: Pay ahead of schedule

Your student loan servicer will provide you with a repayment plan, which you will need to pay monthly. But if you have the money available, consider paying more than what is due each month. The advantage of paying more is that you spend less in interest over time. The sooner your loan is paid off, the less you owe.  

Option 2: Pay on schedule

Many students choose to pay back their loan over a 10-year standard or graduated plan. By default, you are placed into a 10-year plan where your monthly payment is the same each month.

You also have the option of selecting the graduated plan, where you payments start small and increase every two years. This may be a good option if you think you will earn more as you gain more experience in your career. Because you pay less per month initially, the downside is you pay more interest than with the fixed-price plan.

Learn more about repaying student loans on a 10-year plan.

Option 3: Pay based on income

If you are unable to afford the monthly payments of a standard 10-year schedule, you may be eligible for income-based repayment. If you are eligible, your affordable monthly payment is determined by how much you earn. But since you are paying less per month, it will take you longer to pay off your loan in full. You will accrue more interest in the process, which means your total paid will be higher.

Learn more about income-based student loan repayment.

Option 4: Delay payment

If you are unable to afford any payments at all, you can apply for deferment or forbearance. You may be eligible for forbearance and deferment, where you temporarily put off repayments, if you are facing economic hardship or continue your education. 

Learn more about student loan deferment or forbearance.


Your four options for repaying student loans: http://bit.ly/1WFYzUY v/ @AmericaSaves @BofA_Tips #studentloans #savings
Tweet: Your four options for repaying student loans: http://bit.ly/1WFYzUY v/ @AmericaSaves #studentloans #savings Tweet this now


Need motivation and support to pay back your student loans? Let America Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.

Take the pledge.

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Tammy G. Bruzon | October 21, 2014

    Drum up #holiday cheer w/a #frugal #family project! Share the gift of giving. http://ow.ly/CVOla  

Saver Stories View all »

Developing a Savings "Game Plan"

Written by Katie Bryan | October 28, 2013

Eunice Diaz, a teacher in Colorado Springs, had been noticing a pattern. Despite the fact that she and her husband were “making good money,” they were spending their entire earnings and “were still struggling at the end of the month.”

Read more...

Challenging Herself to Save

Written by Sara Cooper | April 15, 2014

It all started when Marchale Burton overheard Alabama cooperative extension colleague Isaac Chappelle, coordinator of Alabama Saves, explaining how saving just a little bit – even change – is all it takes to become a saver. “I thought about that,” Burton said, “and wanted to see if it would work.” So, she challenged herself to see how much change she could save.

Read more...

Getting Out of Debt

Written by Katie Bryan | October 28, 2013

In 2004, Tonya Shelton was facing financial ruin. Barely making more than minimum wage and having lost her home to an unexpected family crisis, Shelton and her family were forced to live in a rundown hotel.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving