Getting answers on student loans

College graduates leave their schools with degrees and, often, debts. (Don Heupel/Associated Press)

On May 30, Lynnette Khalfani, author of "Zero Debt for College Grads," answered Boston.com readers' questions on college financing. Here is an edited transcript.

Q. I have over $55K in student loans and currently pay $355 per month. What is the best way for me to pay this off in 10 years?

A. If you have federal student loans, the single fastest way to eliminate that college debt in 10 years is to pick the standard loan repayment plan, which allows you to pay off your debt in a decade or less -- the shortest time frame offered out of all four plans. Your monthly payments will be larger than if you used the extended repayment plan, the graduated repayment plan, or the income sensitive repayment program. But if you pick the standard repayment plan, you'll pay the least amount of money in finance charges and interest.

Q. I have $69 K in student loan debt. I'm not making a lot of money and I don't know if I'll ever make enough money to pay it off.

A. You might want to consider two different repayment programs offered to borrowers with federal student loans. The first is the graduated repayment program, where you pay off your student debt in anywhere from 12 to 30 years. The loan term depends on how much you borrowed. Your payments must always be at least $25 a month.

Another payment plan is the income contingent plan. This one allows you to pay off your debts over as long as 25 years, and if you haven't finished paying it off by then, the rest of the debt gets written off -- meaning you don't have to pay anymore. With this repayment plan, your monthly minimum is just $5.

Q. My daughter is going to college in September. We are looking into loans. Can you advise on what type of loan would be the best?

A. Before seeking a loan for college, make sure you've exhausted all possible other funding sources, including scholarships, grants, work-study, paid internships, and of course, any financial contributions that the family can make.

After that, apply for a federal student loan. Your daughter will have to fill out the FAFSA -- the Free Application for Federal Student Aid. It's a long, time-consuming form. But it's worth the effort.

If she receives federal student loans but still needs additional money to pay for college, then I'd recommend turning to the private loan market.

Borrow money in her name first, before taking out a loan in your name. Federal loans to students carry lower interest rates.

Q. Do you have any suggestions on how to manage the cost of medical school?

A. First, limit your loans to what you really need to cover tuition, room and board, books, etc., but stay away from borrowing for clothes, entertainment, luxury items, etc.; and second, plan to get loans that qualify for loan cancellation or loan forgiveness based on your area of study. For people in the healthcare field there are a slew of loan repayment initiatives and loan forgiveness programs if you will work in certain areas. The National Institutes of Health offers one program, as does the Department of Health and Human Services.

Q. How can families with home equity and IRAs who are sending honors students to college ever catch a scholarship break?

A. Your best bet is to save as early as possible and to use programs like 529 Plans, which are state-sponsored college savings vehicles. It wouldn't hurt also to seek out grants, scholarships, etc.

Q. My daughter is about to become a college freshman. Any suggestions on how to avoid debt?

A. Tell your daughter to learn from the example of Shayla Price, a student from A&M College in Baton Rouge. She started applying for scholarships like crazy -- anything and everything for which she thought she could remotely qualify. Turns out her efforts were well spent. She ended up getting $100,000 in scholarships, which paid for her entire four-year college education. Check out her website at shaylaprice.com.

Q. I graduated from college in 1991. I lost my job in '94 and went into default, thus I currently have a $65K debt. I already consolidated. I'm on the standard loan repayment. But with all the interest and penalties accumulated , I'll never finish. What can I do?

A. Defaulting on a student loan is very serious business -- mainly because by federal law there is no statute of limitations on student loan debt. This means your creditors can literally pursue you to the grave to make you pay off your student loans.

The good news is that if you default on a student loan, you can go through a process called "loan rehabilitation." In a nutshell, you make a deal with your lender, whereby you show them what you can reasonably afford to pay (based on your income and expenses). Then you pay a reduced amount that you and the lender agree to. Once you make payments for nine or 12 straight months (the time depends on what type of loan you had), your loan is considered to have been "cured" and taken out of default status.