An estimated more than two-thirds of graduate school students borrow to finance the cost of obtaining a master’s, doctorate or professional degree. Because graduate school costs range between $30,000 and $100,000, and because many graduate students already have loans from undergraduate school, they may be in for a shock when the bills for repayment begin after they leave school.

The average graduate student leaves school with an estimated $40,000 in student loan debt, although graduates with degrees in professions such as law or medicine may have more than $100,000 in student loan debt. Nearly 40 percent of all graduates report having student loan debt that is “unmanageable,” meaning that 8 percent of their monthly income goes to student loan repayment.
For students seeking to repay their student loans, there are a number of options available to help make repayment easier and to help students avoid default on their loans.

Federal loans

Students with federally backed loans have the best set of options for repayment, which is why if possible, students should do most of their borrowing from federal programs and avoid private loans if at all possible.

For starters, federal loans offer students a six-month grace period after graduation before payments become due. This gives students time to find jobs and get their finances in order before making payments on their student loans.

Federal loans also have a number of repayment options, including:

Standard repayment, which sets a 10-year-period for repayment of the loan.

Extended repayment, which can be used to stretch the repayment period, thus lowering monthly payment amounts, but racking up more interest, thus giving the student short-term relief at a higher price over the long term.

Graduated repayment, which starts monthly payments out low and gradually increases them over time.

Income based or contingent repayment, which sets monthly payment amounts based on a formula that takes the student debtor’s family size and income into account.

Also, holders of federal student loans can suspend payments on their loans temporarily if they hit hard financial times. Deferment and forbearance options allow student debtors to suspend repayment for up to three years.

Loan forgiveness

There are many programs that will pay off a portion of a student’s graduate and undergraduate loans in return for working in a field or area for a specific amount of time. Many states and school districts have programs that will repay some education professionals’ student loans if they agree to serve in an inner-city school or work in a high demand area of education such as science or math. Your school’s financial aid office or the head of your department may be able to alert you to such opportunities.

Private student loans

Private student loans have less flexible repayment options than their federal counterparts. Although some of the generous terms offered by federal loan programs may not be available, there are a number of private lenders who offer some flexibility in repayment.

Depending on the lender, you may be able to obtain an hardship forbearance or deferment or work out a less burdensome repayment plan. When taking out a private student loan, you should ask about repayment options up front, because once you’ve borrowed the money and the loan enters into repayment, you’re responsible for making the payments.

Loan consolidation

Many graduate students have their undergraduate and graduate student loans spread out among several loan programs. This means that once the loans enter into repayment, the students will get monthly bills from multiple sources. By consolidating their student loans, student debtors can reduce the amount they must pay out monthly to their lenders. Although private and federally-backed loans cannot be consolidated together, by consolidating separately students can reduce their monthly debt burden. Also, when students consolidate their federal loans, they set the clock back to zero on their deferment and forbearance options.

When graduate school loans enter into repayment, it is vital that students make timely payments on the debt to avoid damage to their credit, incurring more interest and collection actions by the lenders. Federal and private lenders are willing to work with students facing financial hardship to make repayment easier and less burdensome. For students struggling with graduate school loan repayment, a simple conversation with your lender or financial aid office may help alleviate the burden of student debt payments.