College Grads: Tips for Paying Back Your College Debt

For Boston college graduates and college graduates all over the country, paying back your college debt and student loans can be a heavy burden.  It's not uncommon these days for a student to graduate with nearly $30,000 in college debt, making it even more difficult to pay back. However, here are a few tips to help lighten your load.

• Pay on your college debt regularly and on time: If you make your student loan payments 48 times consecutively and on-time, most lenders will knock a couple of points off of your interest rate. Also, if you have your payments directly withdrawn from your checking account, you can save on interest here as well and ensure our payments are timely.

• Alternative forms of repayment: There are other forms of repayment available to many individuals.  You can ask your lender about different repayment plans if you are having a hard time making payments at the moment.  You can also take advantage of graduated repayment plans for paying back college debt, these actually raise your payment over time because it is assumed you will make more money over time. If you are self-employed and your income fluctuates, you can also set up income sensitive repayment plans.  As your income falls, so does your payment.  

• Ask about Income Contingency Plans: These plans are available through the Department of Education direct loan borrowers.  These plans take the balance of your college debt and any amount that is remaining after twenty five years is forgiven.  However, that amount is then taxed as income.  But, you may save because alternate repayment plans will cost you more in interest if you were to continue to pay on them.

• Tax Breaks: There are tax breaks available to those who have student loans.  If you're in an income level that is eligible, you may be able to deduct up to $2,500 a year.  The income limit to qualify for a full or partial deduction is an income of less than $65,000 for a single person and less than $130,000 for a couple filing jointly.

• College Debt Consolidation: If you have more than one student loan, it may be better for you to consolidate them.  This will allow you to put the loans together into one loan with a new interest rate, which is typically lower.  The rate is a weighted average of all your loans, but does not exceed 8.25%.  

College debt doesn't have to be a burden for ever after you graduate from Boston College.  No matter how much college debt you have, there are options available to help you lighten the load.

Find more articles tagged with: