So you've completed college and are left with a huge amount of debt in the name of student loan. How do you pay back this loan? Student loans are as good as a car loans or home loans in that it needs to be paid back to the lender. Although the interest rate is very low still after a period of four years when the time comes to repay it, it looks a huge sum.
First and foremost calculate and take stock of all your existing student loans. See if it is the same lender from what you've borrowed. Often the lender changes as they transfer student loans from one lender to another. Check out the details before you start paying back. If you've landed with a good job then it is not a task to repay the loan. Develop a good financial plan where in you will pay off your loan as well as make savings for the rainy day. If you have not then you need to think of various options.
Income based payment- You can ask your lender to deduct a certain amount monthly based on your income. For this you need to show your tax returns as well as income slips for the lender to consider this option.
Student loan consolidation- Here all your existing loans are clubbed together and made into one single loan with a single lender. The advantage of student loan consolidation is, there is only one outgoing amount every month and the repayment time gets extended to a maximum of thirty years. Due to which the monthly outgoing gets reduced. But the disadvantage is you are saddled with debt for nearly half your life and your savings are almost nil. Moreover if you've a debt of $ 30,000 or more, you will end up paying a lot more interest. In case you lose your job (God Forbid) then your lender has to be informed and that causes more confusion. So it is wise to research, analyze and decide what suit you the best.
Voluntary service- After graduation you can join Americorps and other voluntary organizations then your student loan get waived. Remember scholarships and grants are not included in this. They are free money that need not be repaid.
Teaching- Teach for America is a program where you can go to low income communities and teach the under privileged. Student loan gets waived of at least $ 5000 per annual.
Military Service- If you join the military service then a loan amount of $ 20,000 is waived. To get even more pay off you can get stationed at high risk stations.
Social work and health service- These are two best areas where you can get pay off of your loans up to $ 25,000. Physical and occupational therapy are also areas that can give relief of your loans.
Social justice- As law graduates if you serve in public interest and non profit organizations then you can ask for loan forgiveness.
The Federal government has come up with several loan repayment options. Check out what suits you the best and go for it.