7 important things to know about paying back student loans

Category: Education

A group of six multiracial high school or university graduates wearing black graduation caps and gowns.  They are standing in a row, smiling and talking.

Whether you’re thinking about student loans to pay for your college tuition, or you’ve already graduated and have student loan debt to pay back, there is a lot to learn about student loans. Understanding certain aspects of student loans can make it easier to pay back your debt and can help you avoid defaulting. Some debtors are surprised to learn about some of these things, and others may find out these things once it’s too late:

You may be able to extend your federal loan repayment period

If you have more than $30,000 in federal student loan debt, you may qualify for an extended repayment plan. Extended repayment can offer the benefit of lower payments, but the drawback to seriously consider is that your student loans will drag out for many more years. Unless you absolutely need to lower your payments, you should avoid extended repayment plans, or else you will have that debt hanging over your head for a longer period of time.

Your town might help pay off student loan debt

Do you live in a rural town? You may qualify for financial assistance for student loan debt. Many rural towns throughout the country are offering this as an incentive to build their communities and encourage more people to live in their town. If you don’t live in a rural town or a town that participates, but you’ve thought about a change of scenery anyway, consider moving to a town that does offer this type of financial help if you have a lot of student loan debt.

You can lower some payments, or even get rid of them entirely, based on your income

Some debtors are eligible for repayment plans that are based on their income, which gives them the choice to lower their payments; some debtors even qualify for partial debt forgiveness based on their income. Pay As You Earn is one repayment plan that allows qualified individuals the option to pay 10 percent of their discretionary income towards their debt over a 20-year period, after which any remaining balance is forgiven.

You may be able to lower payments by enrolling in automatic debit

You may be eligible to receive a 0.25 percentage interest rate reduction by enrolling an automatic payment program if you have federal student loans. Contact your lender for more details.

You won’t default if you’re making at least one payment every 269 days

Defaulting on student loan payments can result in a plethora of severe consequences, from withheld income tax refunds to ruined credit—you may even have your wages garnished. Although you shouldn’t be late on your student loan payments—even just a day late can affect your credit and cause your interest rate to go up—you won’t default right away. As long as you make at least one payment every 269 days, you’ll avoid defaulting on your student loans.

You may qualify for student loan forgiveness

You may eligible for student loan forgiveness if you’ve made at least 120 monthly payments and you work for a public service agency. Many different industries are eligible, so you may be a candidate and not even know it. Ask your lender about your options and to see if you qualify.

You may be able to discharge student loan debt (but not through bankruptcy)

If you’ve thought about filing for bankruptcy because you want to discharge your student loan debt, you may want to reconsider—this is one debt that you won’t be able to discharge through bankruptcy. There are some circumstances in which this might be possible, but for the most part, this isn’t the solution for discharging student loan debt. However, you may have other options for discharging student loan debt. For example, those with disabilities may qualify for student loan debt discharge. If you receive disability benefits or you’re a disabled veteran, ask your lender about your options.

Do you need extra money to catch up on bills and debt? Peachtree Financial Solutions may be able to help if you’re receiving structured settlement payments. Contact Peachtree today to learn more about selling some or all of your future payments for a lump sum of cash.


Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.

Tags: bankruptcy, debt, loan forgiveness, Student Loans

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