3 Repayment Strategies for Your Student Loans

If you took out a student loan to finance your college education, there’s no escaping the time when you’ll be required to start paying those loans back. Fortunately, you’ve got plenty of choices when it comes to financing your loans and knowing your options could save you some money. Here are three repayment strategies to consider for your student loans.

Repayment Plans

When it comes to repaying federal student loans, there are many different repayment plans available. Depending on your situation, one of the following repayment plans may work better for you than a standard repayment plan, which usually means a fixed monthly payment over a particular period of time.

  • Graduated repayment plans start off with lower payments, which then increase over time. This may work for you if you start off with a lower-paying job, but think you’ll probably make more later on.
  • Extended repayment plans stretch out your payments over a longer period of time so that you have a lower minimum monthly payment. However, factoring in interest charges, this will probably also increase the total amount you’ll pay over time.
  • Income-based, pay as you earn, income-contingent and income-sensitive repayment plans are plans that tie repayment amounts to your income. Your payments will change as your income changes, but each of these plans has different details (including potentially complicated tax implications), so be sure to do your research.

If you have a private loan, you may want to contact your lender to see if they offer any special repayment plans.


Refinancing refers to replacing a current loan with a new one that offers better terms. You may want to think about refinancing if you have good credit and make monthly payments on time, as you could qualify for a lower interest rate.

When evaluating the savings of refinancing a loan, consider both the interest rate and monthly payment. While the new loan may look more attractive with a lower interest rate, your repayment could be spread over a longer period of time. You may want to do some calculations to make sure that refinancing would actually save you money and provide the benefits you’re looking for.

If you are thinking about refinancing a federal loan into a private one, be aware that you may lose some benefits of federal loans, such as fixed interest rates and loan forgiveness or discharge benefits.

Loan Consolidation

Loan consolidation may be for you if you have multiple loans and find it difficult to keep them all straight. Consolidating multiple loans into one could make paying back your debt easier, as you’ll only have one loan payment to make every month. While loan consolidation could also lower your interest rate, it can also increase your repayment period.

It’s possible to consolidate multiple federal loans, multiple private loans or multiple federal and private loans together. Like refinancing, you’ll want to make sure that consolidating your loans will in fact save you money or otherwise help you meet your financial goals.

Bottom Line

When it comes to paying back your student loan, there are many options. There’s a selection of repayment plans to choose from, as well as the possibility of refinancing or consolidating your loans. What’s important is that you evaluate your options and determine what will work best for you.

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