Pittsfield, MA -- (SBWIRE) -- 02/14/2013 -- Credit-yogi.com would like these hard-working people to know that there are effective ways of paying off college debt, including:

- Pay off Variable Private Loans
- Use the Best Loan Repayment Plan
- Automatic Payments
- Consolidation

Eliminate Private Loans First

Private loans make up 15% of the money students borrow for college. They come from banks or credit unions, and have variable interest rates. When it comes to how to pay off college debt, starting with these loans is the wisest move. Although interest rates on federally backed loans are generally higher than those on private loans, this won’t last. Variable rate loans may jump as high as 5% to 6% soon, so it’s better to pay them off first and keep the flat rate federal loans for after these are done.

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Choosing a Repayment Plan

Federally sponsored and make up 85% of college debt. There are several options for paying off this college debt, from standard, which is generally $50 per month for the life of the loan, to income-based, which rates one’s payments at a “reasonable percentage” of one’s monthly income. If the loans have not been paid off in full after 25 years, they are forgiven. Keep in mind that the smallest payment per month can result in paying a great deal of interest over the life of the loan, so it may be financially better to pay based on one’s income.

Make Automatic Payments

The best way to address how to pay off college debt is to make automatic payment arrangements. Most private and all federal loans charge a bit less interest when one chooses this payment plan, and that can take up to a year off of the life of the loans. Going with auto-payments makes it easier for a graduate to pay the loans on time each month, which helps his credit score.

Consolidate the Debts

Graduates who finished college before July 2006 would do well to roll all of their loans into one “large” one. This is a great way to go about paying off college debt, as the consolidated debts will carry a very low interest rate. If someone has graduated after that date, every federal loan has a locked in interest rate, so consolidating won’t make much difference.

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