Consumer Reports: Easing the burden of student loans‎

Millions of students graduating from college this year will have a shadow hanging over their heads. An estimated two-thirds are burdened with student loans—$25,000 on average. And graduate school can push debt much higher.

Student loans are different from other types of loans. They can't be erased if you declare bankruptcy. And lenders can take money from your wages, tax refunds, and even Social Security if you don't pay up.

Consumer Reports advises taking out Federal loans such as Perkins or Stafford with fixed rates, rather than private loans from banks with variable rates. And with Federal loans, you get more flexible repayment options. Generally, with a Federal loan you don't have to start repaying until six months after you graduate or if you drop below half-time at school. At that time you may qualify for any number of payment plans.

For instance, Federal loans may offer:

A standard repayment of at least $50 a month for 10 years.

Extended repayment that gives you up to 25 years to repay.

Graduated payments, which start small and get bigger when you're likely earning more.

Income-based payments, which may forgive some of the loan after 25 years.

Another advantage to Federal loans: If you are having trouble making your payments, the government will usually work with you to negotiate a deferment or a new repayment plan. But no matter what kind of loan you have, Consumer Reports says, talk to the lender if you can't keep up to try and protect your credit rating.

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