Different Ways to Pay off Student Loans

As you graduate from college days the reality of your student loan debt will hit home. The chances are that you may be graduating with debt in excess of $20,000 which is a high amount to repay, but hopefully you gave some thought to dealing with it whilst in college. Some will have made a head start by paying the interest due whilst in college, whilst others will have deferred the interest until after graduation. Unless you want to carry student loan debt for many years the best option is to tackle paying it down aggressively before you need to shoulder other financial burdens.

The first thing to do is separate any private student loans from federal loans, and consolidate the latter into one monthly repayment, possibly reducing the combined interest rates as you do so. Whilst both federal and private student loans will need paying on a monthly basis, concentrate on paying as much extra as you can towards the private loans as they carry a higher interest rate. You can pay extra from income if you continue to live the life of a frugal student for a couple of years.

One option to pay off student loans is to defer the world of work for a year and sign up to a volunteer organisation which will pay a living stipend and then award you with a lump sum towards student loan debt at the end of the term. This can offer valuable work experience in several fields. The VISTA program which fights poverty in America awards $4725 at the end of one year, whilst the AmeriCorps National Civilian Corps awards $5350. The Peace Corps is another option. The advantage of these programs is the award is given in one lump sum to reduce the outstanding student loan.

There are careers in the public service which offer student loan repayment from either federal funds, or state and federal combined funds. Opportunities exist in nursing, teaching, social work, law, medicine, dentistry and the veterinary profession, with new programs being introduced each year. Generally they require that the professional graduate work in a certain area for 2 years for a standard salary and in addition have part of their student loans paid off.

The best advice is to try and pay your student loans off as quickly as possible, either through a program such as these, or by paying more than you need to reduce the debt faster, and thus pay less interest overall. For those graduates that are not in a position to do this there are options such as income based repayment and deferment. Extending the life of the loan though just increases the overall debt, which means the loan costs more and takes longer to repay. Debt can be more than just a financial drain so tackle it head on rather than letting it drag out over the years.