Paying back your student loans

Six months after you stop taking courses (at least half-time) -- whether or not you've graduated -- your federal student loan bills starting coming due.

Even if you've moved and haven't received a bill in the mail, you still owe Uncle Sam. It's your responsibility to make sure the government has your current mailing address.

Failing to pay your federal student loan on time is very costly. The government charges late fees, and -- if you let your bills go unpaid for too long -- collection fees. And, of course, they report your delinquency to the credit bureaus, which makes it hard for you to get a credit card, car loan, mortgage, or, in some cases, certain kinds of jobs.

The good news is that there is no penalty for paying down the loan ahead of time. And the government has many different kinds of payment plans that can reduce the pain of those bills.

1. Income-based repayment plan. These plans cap eligible students' payments based on what they earn, making it easier for low-income earners to afford their loans.

In 2012, income-based repayment plans allow you to cap your monthly payments at a maximum of 15% of your disposable income.

Public servants, such as teachers, police officers and social workers, who sign up for this option and make 120 on-time payments (10 years' worth) can have any remaining balance forgiven.

But to keep this option, you must send the Department of Education information documenting your annual income. Every year your income increases, your monthly loan payment will increase a little as well. Here are some basic stats:

• Monthly payments for the average student who owes $25,000: Depends entirely on income. For the unemployed, or low-income workers, monthly bills could be $0, although the balance will keep rising due to interest. A single person earning about $30,000 would pay about $170 a month.
• Total paid: It depends on your income and job.
• Watch out: Don't be confused by similar sounding options, such as "income-contingent" or "income-sensitive" repayment plans. They are not the same.

2. Standard 10-year repayment. If you don't try for one of the alternates, this is the repayment plan you'll automatically be assigned to. If you can manage to keep to the standard schedule, you'll pay off your loans in a reasonable amount of time.

• Monthly payment for the average student who owes $25,000: $290.
• Total paid: $35,000.

3. Graduated repayment plan. The graduated plan starts out with low payments but then raises them by about $50 every two years so that you pay off the loan in 10 years. It's best for students who are certain their income will rise quickly after graduation.

• Monthly payment for the average student who owes $25,000: For years 1 and 2, they'll pay $197 a month; 3 and 4, $240; years 5 and 6: $292; years 7 and 8: $355; years 9 and 10: $431.
• Total paid: $36,000.

4. Extended repayment plan. You can ask to make smaller monthly payments for more years by stretching out the payments from the standard 10 years to as many as 25 years with an extended plan. Of course, that means you'll end up paying a lot more in the end.

• Monthly payment for the average student who owes $25,000: $175.
• Total paid: $52,000.

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