- Tips for handling student loan debt
Mark Kantrowitz, a leading expert on student financial aid and the founder of www.finaid.com and www.fastweb.com, offered some solutions for students smothered in debt.
Graduates experiencing short-term financial difficulties, such as unemployment or medical or maternity leave, can defer their payments for a few months.
In the long term, that's not a good choice, because interest still accrues.
Instead, try income-based repayment, instead of loan-based. Payments are determined by the amount of discretionary income the borrower has. The rate usually amounts to less than 10 percent of gross income. Any debt remaining after 25 years is forgiven. That drops to 10 years if the borrower is working full-time in a public service job, such as in the military or police forces, as a teacher or at a nonprofit organization.
Another option is extended repayment, which stretches out the term of the loan to lower payments.
"Always borrow federal loans first," advised Kantrowitz. "Don't turn to private loans until you have exhausted the federal limits of funding."
Federal loans are on a fixed interest rate and loaned out without regard to a borrower's credit. Private loans generally require co-signers, unless a student has a great credit rating.
— Sara Jane Pohlman
Posted: Saturday, June 2, 2012 12:00 am
Emily Fant, 25, grew up in Lodi and attended Tokay High School. After graduation in 2005, she spent two years at San Joaquin Delta College, and then transferred to the University of Chattanooga in Tennessee. Fant took out student loans to cover most of her tuition.
Her family banked at Wells Fargo, so Fant took out a series of loans over two semesters, with her mother co-signing.
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Saturday, June 2, 2012 12:00 am.