Lowdown on Loans

Careers and Colleges, Nov, 2000 by Denise Rossitto

All in all, loans can be a viable option for paying for college, as long as you borrow within your means and keep up with your repayment plan. If you need loan advice, contact your high school guidance counselor, local banks, the U.S. Department of Education (1-800-4-FED-AID) or the College Answer Service (1-800-891-4599). You should also search the Internet for related Web sites (see Web Watch).

Denise Rossitto is a freelance writer and manager of corporate communications at SallieMae, the Student Loan Marketing Association.

AVERAGE COLLEGE DEBT

If you're taking on a student loan, you may want to compare your debt burden to that of a college senior graduating from a four-year private college.

TOTAL AVERAGE LOAN DEBT $14,290

AVERAGE MONTHLY PAYMENT $175

NUMBER OF YEARS TO PAY OFF DEBT 10

TOTAL PAID WITH INTEREST $21,032

Source: SallieMae

The Lowdown on Repayment Plans

Below are some types of repayment plans and their pros and cons.

Standard repayment: Fixed monthly payments, usually for 10 years.

* Pro: Quickest, least expensive option.

* Con: High monthly payments.

Graduated repayment: Payments start low and increase every two years.

* Pro: Payments rise as your ability to pay, hopefully, also rises.

* Con: Higher interest in the long run.

Income sensitive repayment: Payments are a percentage of your monthly income.

* Pro: Affordable payments mean you'll be able to make rent and your loan payment.

* Con: Higher interest in long run.

Extended repayment: Payments are reduced and spread over up to 30 years.

* Pro: Low monthly payments.

* Con: You may have gray hair and grandkids by the time you pay off your debt.