What to Know About Your Student Loan Debt

When the ceremony of college graduation subsides, many millennials face more than just the burden of finding a new job — hello student loan debt.


Studies show some millennials have an average of over $28,000 in outstanding student loans by college end.


Breathing Room


These are interesting times for those holding student loan debt. The Biden Administration announced that pandemic relief for about 41 million federal student loan borrowers will be extended under the CARES Act. The extension will give most federal student loan borrowers additional bill-paying breathing room through October 1, 2021.


With the forbearance, student loan payments and the interest on your loan amount automatically stop. But remember, while you have a little breathing room, this is only temporary, not forgiveness of the loan. Your debt will be waiting for you when repayment resumes in October.


If you have been fortunate enough to have steady income through this crisis, there are real benefits to keep track of your payments and get ahead of the game, once loan bills are due again.




Repayment Options


The overall sum can be daunting, but there are several repayment options that can make it easier while maintaining financial progression. Some of these options include:


– Standard Repayment – with this option, you pay a fixed monthly amount and pay off the loan in 10 years (or less).


– Graduated Repayment – Starts with a lower monthly payment amount and then gradually increases the payment amount every two years.


– Extended Repayment – Stretches loan payments from the standard repayment period up to 25 years.



Additionally, if you have multiple federal loans, you could always look into consolidating so that you can make one single payment each month that covers all of them.


There are more options that the government offers, which you can review here, but your approach should remain the same: choose the best repayment plan that considers both your short and long term financial picture, minimizes interest, and will keep you from going into default on your loans.


Repayment plans can be changed in the case you find one that better suits you later on; this often occurs for those with loans that are eventually going to be eligible for forgiveness.



  • The federal government’s loan simulator is a great tool to use when calculating the monetary costs of one repayment plan versus another. The question then becomes how the costs of each plan ranks for you in terms of the other implications it will have on your finances.


  • A consultation with an impartial financial counselor, such as Greenpath, can resolve any questions you have about how to decide and enact what’s best for you.


  • They can help you get a full picture of your credit. If you’re looking to finance a new car or acquire a business loan, you have to consider how your level of debt, repayment plan, and history of on time payment is going to look to potential creditors.




When Life Happens


Ideally we’d choose repayment plans, pay everything off early, and go on our merry way, but life doesn’t always work like that. When life happens, lenders will work with you to stay current and reduce the burden of your debt.


Don’t be afraid to reach out to your lender. Avoidance may cause your loans to fall into default and mess up your credit; better alternatives include deferment or forbearance.


Deferment lets you temporarily suspend making your student loan payments without interest accruing, while forbearance allows you to do this WITH interest accruing. Still, even suspension of payment with interest is better than withheld tax refunds or being sued by debt collectors, both of which are possibilities that come with defaulting on federal and private student loans, respectively. Consult your individual lender on your specific circumstances. You’ll be surprised at how willing most of them to work with you.



By understanding your repayment options, considering your priorities, and being proactive when life happens, it is my hope that you’ll come to view your student loans as a marker of achievement, as opposed to a sign of defeat.


About Post Author

From the Web

Skip to content