Student Loans Can Be Cleared in More than Just One Way

Jan 23
09:11

2012

Lara Sawyer

Lara Sawyer

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After graduation, the financial break provided by a student loan finally comes to an end. Repayment becomes the priority. There are several ways to pay and, crucially, a chance to negotiate a payment schedule.

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Lenders tend to share the same opinion that student loans should be offered on more flexible terms that other loans. This is great news for students,Student Loans Can Be Cleared in More than Just One Way Articles who might otherwise seriously struggle to handle the financial pressures. But, the loans will have to be repaid eventually, meaning the debt hangs over them until graduation.The idea of the scheme is that a student graduates, gets a job and then repays the loan, by which time the interest built up will be substantial. In fact, loans for students are highly flexible because even when it comes time to pay, the repayment schedule can be negotiated.Not only that, but periodic payments when a student is flush, usually after the summer break spent working, helps to reduce these loans to cover student expenses and fees. In fact, there are a number of ways in which graduates can repay their loan debt.Repaying IndependentlyThe most obvious method is to simply pay the student loan off though an agreed monthly repayment plan. This can usually be done automatically, with the money required simply taken out of the salary figure deposited into an account on pay day. This works well because of the structure, but the only catch is the graduate needs to have found a job.The advantages to lenders offering loans for students is that they tend to develop a healthy relationship with their young customers. But part of developing that relationship is to be flexible. For that reason, it is possible for students to meet with their loan officer and work out an affordable repayment scheme.The fact is that loans to cover student expenses and college fees can add up to quite a lot over the course of university life. By the time of graduation, the student might own $150,000. So, negotiating a workable repayment solution is essential. It may take 15 years to repay the loans, but it can be more easily handled that trying to pay the sum over 5 or even 10 years.Debt ConsolidationOf course, it is possible too that student loans came from a number of sources. For example, the loan from one lender for $25,000 was added when extra cash was required, of $5,000. Perhaps one or two other loans were picked up along the way, as particular financial difficulties cropped up.The sheer number makes it necessary to consolidate all these loans for students into one management figure. This simplifies the situation, reduces the repayment amount, and can effectively lessen the financial burden.Unfortunately, because the lenders have already been patient in issuing loans to cover student expenses and fees with a repayment delay of maybe 5 years, the interest rate can be high. Over 20 years or more, the total interest paid can be huge, but the important thing is that the repayments are manageable, and not a struggle.Alternative PaymentThere are other ways to pay student loans, without having to actually pay any money. For many, this is a very attractive prospect, but of course nothing is for free in this world. The scheme involves a graduate either serving their debt in the armed forces or doing community service.This method is referred to as loan forgiveness, and allows the graduate to write off a large portion of these loans for students each year, and over a number of years pay it off completely.Under the GI Bill, for example, military service will wipe as much as $20,000 off the debt, while a further $5,000 per year will be removed from the total owed if the graduate teaches in deprived urban areas or in isolated rural communities.In this way, loans to cover student expenses end up helping to get these same students involved in community activities.