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Here is what I've learned over my years of dealing with student loans. --Dogshed 23:24, 26 November 2006 (CET)
If you use up all your deferments and forbearances to avoid defaulting on your student loans you will not have them to use in the future. (I think this rewording avoids the need for a citation.) For this reason one may choose to make payments on their student loans while in Korea.
You should consider paying as little as possible towards your student loans. A recent article on the Kiplinger's website discusses how to balance payments on debt with savings. This article suggests that higher interest debt be payed before lower interest debt and to concentrate on paying off "bad debt" before saving and investing. The article also says to "not be in a hurry" paying off federal student loans which are concidered "good debt" and have new rules for interest deduction. The article also recommends that you lower the interest rate by consolidating your student loans and to get an interest rate discount by using automatic deductions from a checking account in the US. [1] Other interest reductions may also be available.[2] Note: The Nelnet website gives some reasons for not consolidating Perkins loans.
Federal Direct Consolidation loans keep the subsidized loans separate when consolidating and keep the subsidy on them which will pay the interest when under a deferment during school work that qualifies as an "eligible program". Ask your perspective loan companies how they will handle subsidized loans during consolidation. You may also have loans moved to another loan servicing company when consolidating. [3][4]
If you pay off unsubsidized loans first less interest will be capitalized when under a deferment during school work that qualifies as an "eligible program". Other forbearances and deferments, e.g. a hardship forbearance, may be used while for attending a program not elligible for an educational deferment but the subsidized loans will not have their interest paid. [5]
There is a limit on the amount of time a borrower may use administrative and hardship deferments. Ask your loan company.
Income sensitive payment plans allow one to reduce the payment to a percentage of income that is often only slightly more than the interest rate. based on the author's experience, loan representatives will say this is not available but calling another representative or completing a form on the loan company's website could allow one to get the income sensitive payment plan. Graduated payment plans increase the payment over time on a set schedule instead of an increase in income. You can always increase your payment amount later.
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