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Many of you face student loans from different lenders and with different payment plans. Whatever situation you may be in with student loan debt, all debtors have one thing in common. That one thing is that they need to pay the loan back.

To give you a bit of an idea what will happen if you don’t pay the loan back we can take a look at some of the steps toward credit hell. I give these to you so you can make sure you know when things are looking bad.

A Bill

First you start off with getting a bill in the mail. This is a simple reminder and the first area where you need to just pay it off. You should not go past this part really ever. If you need to set up a automatic debt repayment plan.

Delinquency Letters

This is the next annoying step that will haunt you. They will probably accompanied by phone calls to remind you that the whole process of paying that debt back wasn’t just some joke that your lender made up.

Final Notice/Default Claim

Eventually after five or six months you will receive a final notice and your bank will tell you to pay your loans back or they will file a claim against you for not making payments. This is where it just is getting ridiculous. Now they are going to contact a guaranty agency that will go after you hard until you pay back this loan or catch up on payments.

Often they will get so strict that they will want the whole money back now, but that will be hard when you are a struggling graduate with little income and thousands to pay back. You will have to contact them and beg for some forgiveness. I would come up with some very good excuses at this point.

Bye Bye Credit

Besides the government reaching out into your paychecks and taking a bite out of it, if you don’t pay back the guaranty company then you can expect them to contact the national credit bureaus and inform them of your lackluster payment history. If this happens then you can forget about a house, car, cell phone, furniture, and other areas where credit is looked at. Basically you better have a lot of cash or start looking to pay some serious dues for several years to get back in the good graces of the credit bureaus. Just don’t let it get to this and always stay in contact with your lender.

Repayment Options

Well we have established that it gets pretty ugly if you don’t pay your loans back in time. Now I know that many of you are in different financial situations so we are going to take a look at some methods to pay this loan back in a timely manner and more importantly save your credit score from crashing like stock market.

Standard Payments

The fastest way to pay off your student loan is through the standard payment. This will allow you to pay back the loan in about a decade. What is nice is that as your income increases you can always pay off more faster and fight off the interest and make a good hit at the principal amount. This will obviously save you more money and help you to get this past you a lot sooner.

Income-Based Payments

This is a payment form for people that are working in seasonal jobs like selling for a company during a summer or really doing sales of any kind. You are going to have great weeks and poor weeks. This is basically a scale based on your income to take out more when you make more. This can be good if your checks are not very consistent and you are concerned about paying off all of the other bills you may have.

Graduated Payments

This is a gradual increase for students that have to climb the corporate ladder to get ahead. This will happen with many of you where you will have to pay your dues and build a good history with a company to move into a position where you are making the salary you want to support your lifestyle. This would require probably 15-30 years to pay off depending on how quick you caught on with a company.

Long-Term Payments

This is for those of you that look to get a job that doesn’t pay well or maybe you just have a lot of bills as it. Basically it means that your income is not that much different each month from the money you send out. Use this as a last options because this could take a good 30 years to pay off and you shouldn’t really have to look at this as an option even though it has the lowest rates, you will have to pay a lot more down the road because of the time it takes to accumulate so much interest.

Many of you go through the process of getting a federal student loan, but when it comes time to pay it there are so many potential issues that can make repaying it a colossial nightmare.  The last thing that you want to do is wait thirty years and if that is the case then maybe you would be better off just dying, but we don’t recommend it as an option to take care of federal student loan debt.

One option that you can have is doing a little service for the government.  It is known as Student Loan Forgiveness.  The U.S. Government has plenty of issues that they need help on and this is a good way to trade needed skills for dollars.  There are several different ways you can get student loan forgiveness based on what you received a student loan for.  For some of you this might be something worth taking a look at if you have time, but not money.

Medical Student Loan Forgiveness

One way that many medical students take care of their school loans is through a program from the National Health Service Corps.  You can pay off a loan by providing your time for underprivledged areas that need medical assistance.  They will help you pay off student loans and at the same time give you a salary.  That is an impressive deal where they pay your debt and give you a living.  You can contact the Office of Statewide Health Planning and Community Development at 916-654-1833.

Teaching Positions

There are teaching options out there to teach special education courses, students in low-income areas, or an area where there is a small number of teachers compared to students.  This is something you can do during the summer or potentially a part time position based on what the government says is possible.

Americorps

If you have a year to spare then you can volunteer it to the Americorps and you will be rewarded nearly $5,000 and an even larger stipend around $7,000.  This can help pay some bills, but might not cover everything.  This is going to be one were you will probably have to be passionate about it.  On average 50,000 people join annually for more than 2,100 non-profit organizations, public agencies and faith related organizations.

Peace Corp

This option will give you up to a 70% reduction on your student loans if you provide some good behaivor and it will help defer student loan payments.  This will allow you to travel abroad and see some amazing situations around the world as far as the struggles people face that we take for granted.  Many of these opportunities will allow for you to make a great impact in other people’s lives.

Social Services

These are some of the best options that you can have.  There are plenty of loans that can be erased off the records because of your involvement in law enforcement, assisting with disabled, medical field positions, or assisting low-income individuals find jobs and housing.  The impact of these jobs are extensive on other people’s lives as much as yours.

Military

This tends to be a little dangerous and please don’t do this just to get your loans taken care of.  Realize the risk of what you are doing.  If you don’t then take a look at CNN.  This can be a great place to create discipline if you are looking to get a little regimented.  This can help take care of student loans and you can get paid very well for standing in the line of fire.

Physical and Occupational Therapy

What you will notice is that with all of these options there are many ways to get forgiveness if you provide a need that our government is desperate for and this is one area.  There are many therapist fields that are high in demand and the supply is low.  This is another example of providing a needed skill for a little student loan help from Uncle Sam and large companies.  Trust me when I say that hospitals and health-related organizations tend to have good money.

Law School

This tends to be nearly $100,000 of debt.  Yikes.  Well this is like a small mortgage and I am sure you probably will have undergraduate debt too.  Take the time to breathe first and then use all of your great studying skills that you learned to find Law Schools that provide loan forgiveness for non-profit and public interest positions.  This might not be glamorous, but it will get you out of the hole you are in faster, unless you have a smokin’ law firm offer.

Many students go through their youth with little desire to even consider reading a statement from their lender for their student loans.  This can be a dangerous decision because it can quickly sneak up on you and come to bite you in the rear.  I suggest that you take the time if you are in college now to pay attention to when you have to start paying your lender and how much.  If it has jumped on your back recently like a clinging monkey then you might need to take action immediately to get a good plan set up for your student loan repayment.

There are a couple simple things to find out to make sure that you can get on the right track to paying off your loans.

1. What is the loan classified as?

There are many types of loans that are out there and they all are going to have different requirements for you based on what terms they have established with the loan.  Many students will find American government funded loans such as the Sallie Mae, Stafford, Perkins, or PLUS loans. 

There are certain loans where you will have the full responsibility and then there are loans like the PLUS loan that is your parents obligation to repay.  If your parents have done that for you then I would suggest that you are a very lucky person.  I would look to do what you can to help pay for it in the future if you are able to create financial security in a short period after college.

There should be a thorough list of paperwork that you should keep by your organized in a file of some kind or typed up on to a computer.  Read through all of the terms to know when you have to start paying and how much is required of you.  Also get a good understanding of any penalties you may have for late payments, just to know what you would have to deal with and how short of a leash your lender has given you.

If you have lost the paperwork then contact the school’s financial aid office to get documentation on what you owe.  This information is easy to gather and shouldn’t take too long for you to get back on track if you have been a miserable mess for the past couple years.  If the school doesn’t have it then they will get you in touch with who does.  This is information that is your legal possession that you can always gain access to.

2. How much am I going to pay you?

When you apply for these loans there are decisions made by the Department of Education as to how much they can offer to your student situation.  They might give you more than you need or not enough and require you to go get another loan from another source.

You will receive statements probably at the end of each semester that you are in school giving you an understanding of how much you borrowed and how much you owe.  Keep these on file just in case if there are errors in their system as to what actually is going on.  This will save you a lot of time.

Make sure that you separate your forms from any scholarships that you may have received because there are plenty of documents out there from many different companies.  Make sure you know first if you are getting a Pell Grant or some kind of scholarship before you get a student loan and for how much because the last thing you want is to get a loan that you don’t need.

3. Who is it that I am paying back?

When you make a decision to go with a certain type of a loan you will also decide which bank you will lend from.  The bank usually will go through a thorough process and decide on how much to give you and then if they do pay you it will probably be on a semester basis until you are finished with school.  Make sure to stay in school if you can to avoid the messy idea of deferring payments.  Many students do it for plenty of solid reasons and it can be taken care of, but with some banks it can be a hassle.

The bank will sell off the loan to Sallie Mae to make more money and in turn you become the possession of Sallie Mae, which is the government established Student Loan Marketing Association.  This association was established to create more loan opportunities for students across the country and has been hailed as one of the best achievements in government action along with the creation student loans since in the 20th century.

Now there are going to be times when Sallie Mae will not only buy up the loan, but sell it to other companies and each time this transaction may happen with your loan, you will be notified so you know who it is that you are paying your bills to.  The terms and conditions will stay the same, but make sure to be on the ball because some companies may be less lenient then others.

There are some ways that you could potentially cut down on your student loans even before you leave school which many students do not even take the time to consider while they are pounding the books for A’s. It might require you to be creative with your student loan and how you handle your payments.

Don’t Be A Lemming With Debt

According to a study given by the National Post-Secondary Financial study the results showed that nearly two-thirds of college students struggle to pay loans and they unfortunately graduate with a bachelor’s degree and student loan debt of some kind. For undergraduates with federal student loans the average debt is nearly $20,000 coming out of school.

That is a lot of money that could buy you a nice new car or maybe a down payment on a house. Even after you find a student loan opportunity and even if you take it be willing to look for other opportunities out there for loan consolidation. There are going to be times during your 4 years at school where a better deal may pop up and give you better rates and easier payments.

Study For The Right Debt

There are plenty of private and non-profit student loans out there that are willing to offer loan consolidation that could save your skin when it comes to a loan. Many federal student loans have to deal with increasing interest rates. That translates only to more money coming out of the student’s pocket and more payments long term.

The last thing you want to do is worry about more bills along with utilities, rent or a mortgage, car payments, saving for a family of your own, and countless other things that come up. I studied my bills yesterday and I was shocked to see all of the random payments that you don’t account for.

Student loan consolidation could help you make larger payments with fix rates and get closer to attacking the principle. Where many students it could take 20-30 years, you may be able to get it done in 10 years or maybe even shorter. Just think to yourself what type of relief that will give you when you don’t have to worry about a long term debt like that any more.

Where To Go To Consolidate

Consolidating student loans can be done through the Federal Family Education Loan Program also know as the FFEL, along with banks, secondary markets, credit unions, and plenty of other lenders will provide those same benefits. These are all worthy options for you to take a look at during your four years in school. I know that is difficult for many of you because the last thing that you want to do is more reading, but I promise you that it will save you a lot of money down the road and create more freedom long term.

You will actually find out that many federal education loans are capable of being consolidated whether they are subsidized or not. Some of these include Stafford Loans, Perkins Loans, and Federal Nursing Loans. Whatever loan you may have, make sure to check your commitments or covenants in the contract.

When it comes time to repay a student loan there are several things that are musts that you have to abide by order to make sure that this is positive credit experience. I personally feel that how you handle the payments with your student loans will be a significant factor on how you deal with mortgage payments, car payments, and any big bill you will face for the remainder of your life…

As many of you know when you default on your loan if you forget to pay your bills. You need to make sure you read over the promissory note for the loan so you are properly aware your loan conditions, responsibilities, and rights. You’ll want to be sure to avoid guaranteed online personal loans if you can help it.

These tips I am going to bring up are going to make a difference whether this is a make or break experience.

1. Review Correspondence

First of all, review and comprehend all of the papers, verbal converstaions and other communication you have between you and your lender, servicer, and/or loan holder. Respond quickly when they require your time because this can be helpful for any alterations they may have.

2. Keep The Creditor’s Number Handy

Many people move or change their name or address for whatever purpose. Just be kind to your creditors and tell them that you have made some adjustments and do so immediately. Also get a hold of them if you have questions about your statements, issues with on time payments, or also when you want to look at deferment and/or forbearance as options to help with your payments.

3. Know Deferment And Forbearance Options

Also understand that sometimes you payment problems, make sure that this is always a priority to handle for the benefit of your credit. Make sure you are knowledgeable about deferment and forbearance and you are able to exercise your options when you need them.

4. Student Loan Consolidation May Be Necessary

Another option may be for you to look at loan consolidation and how you can combine payments and lower interest rates. This can save time and definitely money short term, long term could be another issue.

5. Be On Time

The main priority is that you send your student loan payments on due dates, for the full monthly payment amount or more, even if you don’t get a bill. If you don’t do this then this hurts your credit and as I said this will be a large factor on how you handle loans and monthly payments for the rest of your life. You don’t want to start having bad habits now at this early stage in your life for credit issues such as getting a mortgage, furniture, cars, cell phones, etc.

6. Pay Off Your Student Loan As Fast As You Can

Understand the payment options provided by your lenders to support your situation financially to get ahead. With some options, you can minimize the total cost of the loan by making higher monthly payments to save money down the road after school.

With all of these points remember to keep focusing on ways in your daily expenses to save dollars here and there or to make more money here or there with a small business or a part-time job. Cut your corners and save yourself financially so you can enjoy your future.