Due to the economy, borrowers are defaulting on student loans at a record rate. Monthly payments are so astronomically high that graduates often must move back in with their parents just to pay off loans. This phenomenon is occurring with Master's students as well.

Therefore, how can a borrower afford monthly payments for student loans?

Working with Student Loan Companies

One option is to apply for an income-based repayment (IBR). Larger lending providers, such as Sallie Mae and Citibank, offer this option to their customers.

Here is how IBR works: the graduate realizes that her/his monthly repayment plan is too high. For example, the borrower has a loan of $30,000, which includes estimated interest and principal, and s/he is put on a five-year plan. The fixed rate of the loan is 6.8 percent. Thus, the borrower must pay approximately $533 a month and s/he simply cannot afford it.

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