Exploring Student Loan Repayment Options

By: Mercedes Pineda

The Consumer Financial Protection Bureau (CFPB) reports that more than 40 million borrowers owe on federal and private student loans, with the average student debt around $23,000. I, like many of you, am one of those 40 million borrowers. Student loan debt can be a stressful financial burden for most people. However, armed with some knowledge and a helpful toolkit, we can make these loans more manageable.

Why is paying back student loans so difficult? The CFPB’s recent report highlights many of the problems student borrowers experience when trying to repay their student loans. These problems include (but are not limited to): a lack of flexible repayment offerings for distressed borrowers, lack of information regarding repayment options, paperwork processing delays, and inconsistent instructions from servicers. Below I outline the best way to approach repayment and the various options available to borrowers. 

How Do I Find Information About My Loans?

The best place to start is the National Student Loan Data System (https://www.nslds.ed.gov/nslds/nslds_SA/). This is a government database that keeps track of all your federal loans. Speak to your school’s financial aid administrator about any information they may be able to provide you about your loans. Additionally, check your credit report. Student loans are often listed on your credit report. You are entitled to a free copy of your credit report from each of the three major credit-reporting agencies. (www.annualcreditreport.com). However, please be aware that student loans may look confusing on your credit report. Loan servicers often sell loans, and it may be difficult to determine which servicer owns your loan now and how much you owe. I highly recommend going over your credit report with a trained financial counselor. Take advantage of your local or county community services that provide this resource!

What Are My Repayment Options?

  • Standard Repayment Plans
    • Payments are generally a fixed amount over the course of a certain amount of years
  • Income Based Repayment Plans
    • If you have federal loans, flexible repayment options may work best for you. These plans take into account your yearly income and the payments are a certain percentage of your discretionary funds (that is the money you have available after paying rent and bills). Payments are recalculated every year. Generally, outstanding balances are forgiven after a minimum of 20 years.
    • Learn more about these plans here: www.studentaid.ed.gov/sa/repay-loans/understand/plans
  • Consolidation
    • Allows you to simplify repayment by combining loans into one payment. Not all federal loans are eligible for this option, and it may not be the best option for your situation. You cannot consolidate federal and private loans into one payment. You cannot “undo” consolidation.
    • Beware of “Debt Relief” scams! Many scammers try to charge you fees to help consolidate your loans. They can often leave you with a loan that was worse than your original loan! Federal debt consolidation is an option you can apply to for free via studentloans.gov
    • Get more information about consolidation here: http://www.bouldercounty.org/doc/hhs/student-loan-consolidation.pdf and here : studentaid.ed.gov/sa/repay-loans/consolidation
  • Refinancing
    • To refinance you take out a new loan, and you use that loan to pay off the existing loans. With this option you can change the terms of your loan. By doing this you can lock in a different interest rate and save money over the life of your loan.
    • The government does not offer refinancing. You can refinance your federal loans into private student loans. BUT, you may give up benefits such as income based repayment options or eligibility for student loan forgiveness programs by converting your loan.
    • However, like consolidation, there are some scams out there for loan refinancing. The following to sites are reliable and have resources such as a refinancing calculator to help you explore this option:
  • Student Loan Forgiveness
    • The most common of these is the Public Service Student Loan Forgiveness Program. This program allows federal student loan borrowers a chance to qualify for loan forgiveness after committing 10 years to public service work. To find out if you may be eligible for this option use the chart at the following site: bouldercounty.org/doc/hhs/public-service-loan-forgiveness.pdf
    • There are VERY limited other situations in which your loan may be forgiven. To learn more about them visit this site: studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation
    • Please be aware that this is another option that sees many scams. Your federal loans can only be forgiven by the federal government. Please visit the government site listed above or reach out to your servicer directly to figure out if you qualify for a forgiveness program.


I hope the above information will help borrowers explore and consider the right repayment options. I highly recommend seeking out local resources, such as a financial counselor at your community services center, who can help you understand the repayment process and help pick the best option for your situation.

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