Flickr user duncan c

The first few years after you graduate can be pretty rough financially. As a new graduate with little or no experience, finding a job can be difficult. Even when you get hired, more likely than not the starting salary will not be enough to cover your loan payment, rent, and other necessities right off the bat.

Managing your student loans is crucial in order to avoid late payments, increased interest accruals, or default. Defaulting on your student loan can lead to even more serious consequences, from paying hefty collection charges and fees to a damaged credit history and difficulty getting any other loans in the future.

These are some of the options you can avail of if you find yourself financially strapped and struggling to pay your student loans.

1. Start By Speaking To Your Loan Servicer Or Lender

Ignoring your payments will not make them go away. In fact, it will make things worse. If you simply do not have the money to make your payments, it is better to speak to your loan service provider at the earliest and discuss your options.

Loan service providers have vast experience dealing with similar situations. Every year, several students approach them looking for a solution to their loan payment dilemma. Make an appointment to speak to your loan provider and they will help you find an option that will help you avoid getting into default.

2. Explore Other Repayment Plans

The good news about student loans is that you are not stuck with the repayment plan that you agreed on when you took the loan. You may be able to change your repayment plan if the plan you are on is not working for you.

There are several repayment plans that you can look into but these three in particular are worth looking into:

Graduated repayment plan – With a graduated repayment plan, you make lower payments in the beginning and increase the payments incrementally over a period of time. This plan may is particularly good when you are just starting off as a new graduate with a lower salary. As you gain more experience and start earning more, you can increase your loan payments accordingly.

Income-based repayment planIncome-based repayment plans can come as a great relief when you are just starting out, as your loan payment is pegged to your income. The specific details may vary from one lender to another but essentially you pay a percentage of your income. With this plan you know you will never have to put your entire salary towards your loan payment.

Extended repayment plan – This plan allows you to make minimum payments every month by extending the overall term of your loan.

Before agreeing to any of these repayment plans, it is important to do your research, ask your lender questions and understand the implications. While most of these repayment plans help to ease your financial stress for the moment, they will increase the total amount that you end up paying over the life of your loan.

3. Consider Loan Consolidation

By the time you graduate, you likely have multiple loans. Each of these loans will have their own terms, interest rates and payment deadline. Keeping track of all of these loans can be completely mind-boggling and there’s a higher chance that you may forget deadlines resulting in delayed payments and higher fees by way of fines. This will only make a bad situation worse. In this case, loan consolidation may be an option worth considering.

When you consolidate multiple loans into one, you only have to keep track of one amount and one deadline every month. This makes it easier to pay back your debt on time and reduces the chances of late payments.

As with any other repayment plan, you must do your research before you consider consolidating your loans. The interest rate on your consolidated loan is determined taking several factors into the calculation. Getting a lower rate on the consolidated loan may sound attractive but it may mean extending the repayment period, increasing your overall debt substantially. Make sure you check and understand the implications before you make any decision.

4. Look Into Refinancing

If you have been making your monthly payments on time and have built good credit, lenders may consider offering you a new loan with a lower interest rate. Ask around and see what is the best rate you can get. Also find out the term of the new loan. Do your calculations and if it helps save you money, consider replacing your old loan with a new one.

Make sure you understand the pros and cons of refinancing, especially if you are replacing a federal loan with a private loan. In doing this, you may lose out on some of the benefits that federal loans offer such as discharge benefits or fixed rate interests. Also, you will not longer be able to avail of loan forgiveness.

5. Weigh The Pros And Cons Of Deferment Or Forbearance

Deferment and forbearance both allow you to postpone your student loan payments temporarily. Deferment allows you to postpone your federal loan for up to 3 years and forbearance allows you to postpone or reduce your payments for up to 12 months.

You will have to speak to your loan service provider to determine if you meet the eligibility requirements to be approved for deferment or forbearance. The approval process can take some time but you must continue making monthly payments while your request is being processed.

6. Find Out If You Are Eligible For Loan Forgiveness

Certain public service, government, and nonprofit jobs may qualify you for loan forgiveness. There are several different terms and conditions that govern this program. It is worth speaking to your loan service provider to find out more details and to determine if any of your prospective career options come under the loan forgiveness umbrella.

If you have taken student loans to fund your college education, there’s no getting away from them and neither is there one solution that will work for everybody. If you are struggling to pay back your loans, the best thing to do is to start exploring your options in order to determine what will work best for your unique circumstances.

Use College Raptor’s new Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to discover the ideal student loan—for FREE!