Payback time: How to repay your student loans

I recently met a 30-something woman who was selling her home so that she would have more money to repay her student loans. As she put it: "I finally realized that this debt was not going to go away." She's right—there is no statute of limitations on government-guaranteed student loans, giving Uncle Sam unlimited time to collect.

In addition, a notation that her student loan is in default will remain on her file until the debt is paid in full (instead of the typical 7 years). If she does not make satisfactory arrangements to get these student loans repaid, the government can garnish her wages. I have heard of former students having their wages garnished more than 30 years after they obtained their student loans.

The bottom line is that if you are having trouble paying for your education, waiting it out is not an option; fortuantely, there are others.

-Consolidation. You may be able to consolidate several loans into one. Many consolidation loans offer students the opportunity to repay their loans over a 30-year period at a favorable interest rate. While consolidating your loans may decrease your monthly payments, keep in mind that increasing the length of time it takes you to repay may increase the total cost of repaying your loans.

-Deferment. You may request a deferment, or temporary suspension, from your lender if you meet certain criteria such as being unemployed or re-enrolled in school. Depending on the type of loan, you may not have to pay interest during deferment. If you apply for a deferment, you must make all payments until it is granted; you can’t get any deferment on a defaulted loan.

-Forbearance. If you are not eligible for deferment, you may request a temporary suspension or reduction of payments. Forbearance can also be an extension of the time you have to repay your loan. Unlike deferment, interest accrues, and you’re responsible for repaying it, regardless of the type of loan you hold.

-Cancellation. Perhaps every student dreams of having their loans dismissed and, in some rare cases, it is possible. For example, your student loan may be cancelled if you become permanently disabled or if your school closes before you complete your program. Keep in mind that cancellations are not granted for financial difficulty.

Finally, realize that ignoring your student loans only makes matters worse. For more information on student loan repayment, visit the US Department of Education’s website at


Kim McGrigg is the former Manager of Community and Media Relations for MMI.