About Student Loan Payments

College is expensive, and for this reason alone, many college students rely on federal and private student loans. Qualifying for a student loan is relatively simple, and government loans don't involve credit checks. Thus, people with bad credit or no credit history can obtain a student loan. And the best part, federal and private student loan lenders offer flexible repayment plans to accommodate borrowers.

Function

Federal and private student loans are extremely useful. Without them, many people would be unable to attend a college or university. Some people pay their college expense out-of-pocket or rely on credit cards. But this is a quick way to deplete one's savings account or accumulate debt. Federal and private student loans help persons who don't have the money to pay their college tuition. Additionally, student loans are often used to pay rooming expenses and other miscellaneous college expenses such as books, supplies and lab fees.

Types

Student loans feature different types of repayment plans. A standard repayment plan reduces the balance within 10 years, and the monthly installment payment remains the same for the life of the loan. A graduated repayment plan offers lower monthly payments in the early years. Payments gradually increase over the life of the loan--approximately every two years. If unable to afford the payment on a standard or graduated payment schedule, you can select an extended repayment term, in which you pay the least amount possible each month. In this case, it can take up to 25 years to pay off a student loan.

Time Frame

The average student loan has a 10 to 15-year term. However, student loan payments are negotiable, and most lenders are prepared to offer a lower monthly minimum and extend the loan term. What's more, payments aren't required until after graduation. Student loan lenders grant a 6 or 9-month grace period. This gives graduates ample time to secure employment and adjust to their new expenses.

Features

Student loans feature a provision to help financially strapped individuals. If you can't pay your student loan for one month or several months, federal and private lenders offer two options. You can request a forbearance, in which the lender temporarily postpones monthly payments for a specific period. During this time, payments aren't required, but you incur interest. In the case of deferment, lenders also temporarily postpone payments. However, you don't incur interest.

Expert Insight

Unlike other debts, a student loan cannot be included in a bankruptcy. Once you apply and receive money to attend school, the debt stays with you for life. Additionally, failure to repay a student loan can have a negative impact on your credit score. Student loan lenders are flexible, and they're willing to work with borrowers. Communication is the key. Rather than skip or submit late payments, contact your lender and work out a new payment plan. They'll likely modify your due date, reduce the monthly minimum or approve a forbearance request. Thus, you're able to maintain a good relationship with the lender.