Paying for College

6 Ways to Pay Federal Student Loans

And what the penalties are for late payments.

College students graduating this spring are walking away with more than just a diploma. Many will have debt -- and lots of it. The average debt at graduation was $24,000 in 2009, points out Jane Bennett Clark in The Dark Side of Student Debt.

Students with federal loans can get some reprieve if they're struggling to make monthly payments. Here are the various ways they can repay loans, according to the June issue of Kiplinger's Personal Finance.

Standard plan. This arrangement, in which you are enrolled unless you say otherwise, requires you to make 120 equal payments over ten years.

Graduated plan. You make lower payments in the first few years and higher payments later, over a ten-year period. You pay less interest initially but more over the term of the loan. The U.S. Department of Education offers a calculator to determine your estimated payments under this plan.

Extended repayment. Borrowers with at least $30,000 in loans can stretch monthly payments as far out as 25 years, at a commensurately higher cost. Again, use the Department of Education's calculator to determine your estimated payments under this plan.

Income-based repayment. If you have high debt relative to income, you qualify for reduced monthly payments. Any remaining debt is forgiven after 25 years. Visit the Department of Education's Federal Student Aid section for more information about eligibility, monthly payment amounts for a range of incomes and a calculator that will help you determine whether you'll benefit from the program.

Income-contingent repayment. This plan is similar to income-based repayment but uses a less generous formula to determine the monthly amount. To calculate your payments, use the Department of Education's plan calculator.

Consolidation. Available through the Federal Direct Loan program, consolidation lets you combine all your loans into one and extend repayment to as long as 30 years, at a higher total cost. For more information, visit the Direct Consolidation Loans site.

You might qualify for a deferment, forbearance or other form of relief if you're having trouble making payments. See the Postponing Repayment page at Student Aid on the Web. Explore these options to avoid missing payments or defaulting on your loans. Otherwise, you'll face the repercussions listed below:

Late-payment repercussions

1 day Lose the discount for on-time payment

21-20 days The loan goes into delinquency

22-37 days A loan agency sends collection notices

60 days The delinquency is reported to the credit bureaus

270 days The loan goes into default, the borrower is subject to wage garnishment and other penalties

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