Student loan consolidation: Repaying Student loans

How long does it take to repay federal and private student loans? 

There are generally four options offered under the Direct Consolidation Loan Program:
•    Standard Repayment Plan: Allows a fixed monthly payment for a maximum of 10 years.
•    Extended Repayment Plan: A fixed monthly payment ranging from 12 to 30 years, depending on the amount borrowed. The monthly payment will be smaller than the standard repayment plan, but you will pay more interest over the life of the loan.
•    Graduated Repayment Plan: Monthly payments that start out lower, and increase every two years, with repayment required over 12 to 30 years, depending on the amount borrowed. The monthly payment for the first 24 months will be even smaller, and will increase as your income increases. You will pay even more interest over the life of the loan versus the extended repayment plan.
•    Income Contingent Repayment Plan: Monthly payments are based on the borrower’s income, family size, total loan amount and can be repaid over up to 25 years.


If you qualify for College student loan consolidation, it's almost always smart to do so. However it will prevent you from re-consolidating in the future and also may stop interest-free deferments if you return to school.

But if you don’t think you will need a student loan deferrment, and don’t expect to return to school (and if you don’t qualify for the student loan debt government forgiveness program, in which some teachers and others in service to society have some of their debt forgiven- something consoldating student loans disqualifies you from), then consolidating your college loans is probably the right choice.  But what is the best way to repay them? The standard repayment plan is 10 years, which saves a great deal on interest compared with a 30 year loan but resultsin a higher monthly payment.  If that is too difficult financially, and creates even more debt and financial problems, you might want to Choose the extended repayment plan over 20 years.  Your payments will be cheaper (Not half, because of extra interest, but much cheaper- often around 35-45%).  You will pay somewhere around 10% to 15% more for the life of the student loan, but it can make your student loan debt during those years much more manageable.  If later your income rises and your cash flow allows it, you can always pay off your student loans at any time, without penalty.