I’m still four years away from having to repay my student loans, but I know I should start thinking about it now. Get Rich Slowly posted a great guide to repay student loans.
If you have federal loans, your options are much simpler. The interest rate is lower, so it’s usually best to just pay them as scheduled. Private loans are a whole different ball park and very confusing because terms usually vary from provider to provider, while government-backed loans are stuck with the federal terms given, no matter who your lender is.
One option is consolidation, which is not the best option unless you seriously can’t afford the monthly payments. Consolidation leads to a higher interest rate because you’re extending the life of the loan and there are more complications with private loans. Depending on your financial plan, consolidation can be a good or a bad option.
There are also options for loan forgiveness if you are going to be joining the Peace Corps or the military (or other programs that are listed on the FinAid website). I personally don’t qualify for any of this, so I hope I’ll get a high-paying job with my really expensive fancy degree so I can pay my loans off quickly.
Also, you can’t simply just declare bankruptcy anymore and be done with your loans. Certain federal loans will go away, but not private loans. The government decided on this a few years ago because too many students were coming out of college and declaring bankruptcy right off the bat. There are certain circumstances surrounding the issue, which are covered in more detail here.
The FinAid website also has a Loan Calculator that just made me feel very sad about the amount of interest I’m going to pay just on my freshman Stafford loan. Bring on the next three years worth of borrowed money.