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StudentLoan Debt Has Come a'Knockin'!

Posted in Main Blog
November 16, 2015 by Guest Share on: Share on Facebook Share on Twitter

person filling out information I went back to school in my early 40’s. It’s something I’m proud of now, but it definitely left an impact on my life both in experience, and debt.

Back then, companies were laying people off. Unfortunately, I was one of them. Even with my experience, my theater degree wasn’t going to get me far in the business world. I found myself unemployed, then under-employed. Federal student loans seemed the only way to get my education, and my resume back to a place where employers would want me.  Flash forward 6 years and its repayment time. I can manage the payments, because my tuition was lower, and I took advantage of my employer’s tuition reimbursement. But what options are available if your payments come due and don’t fit in with your monthly budget? When it comes to information on student loan repayment, do you research.

Federal Student Loan Options

With Federal Student loans there are options available. 

  • Extended Term - Yes, you can extend your term (depending on the amount borrowed) for as long as 30 years. It definitely lowers your payment, but adds significantly to the amount of interest you pay for that education.
  • Graduated Repayment (that name has a strange sense of irony, doesn't it?) – You’ll be able to lower your payments to as little as 50% of the originally stipulated payment. The payments increase slightly every two years, with a cap of 150% of the original payment. Again, the term can be extended up to 30 years in total. As with the pervious option, consider the total cost and where you're willing to go that extra mile to lower your payments now.
  • Income Contingent – This plan allows your payments to be adjusted based on annual income, which is reviewed and readjusted annually for up to 25 years. At the end of the 25 years, principal amounts remaining are discharged. The amount discharged may be a taxable event, and you're paying extra interest, but it can get your monthly payment amount down to a reasonable level.
  • Income Sensitive - This plan bases payment on a percentage of your monthly income and does not extend your term beyond the initial 10 years allowed.
  • Income Based - Very similar to Income Contingent.

Extended and graduated payment options are also available for "parent loans." And the final piece of good news is federal loans do not have a prepayment penalty. So if you find yourself suddenly in your dream job and you want to get rid of these payments all together, you can simply pay the principal balance off! I can just imagine how great that would feel!

For information on student loan consolidation and other options, check out websites like and

Paying your student loans back now? What were your considerations when contemplating the use of student loans?

Any tips for others on how to manage those bills?

US News and World Report

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