Knowing Your Student Loan Repayment Options
Getting a student loan is definitely a big responsibility. However, for many college students, it is their only option for actually being able to afford college. And with this sort of forced responsibility, many students get caught up in the mix without knowing they have actual options when it comes to how they can repay their student loans.
Hopefully by the time you are done reading this article, you will know all of the repayment options available and have a much better idea of which one suits you the best.
Standard Repayment
This is the plan most people go for, or at least it’s the one they are most often “stuck” with. The standard repayment plan basically means you will pay the same amount on your loan each and every month that you owe money. The only time this may change is if you have a flexible interest rate or if you are nearing the end of your repayment plan, so the monthly rate becomes lower.
You don’t have to do anything to be placed on the standard repayment plan. This is just what is expected of most people. You will need to request it if you’d like a different repayment plan.
Graduated Repayment
Graduated repayment is a convenient plan that adjusts to your burgeoning career. Right when you get out of college and even a few years afterwards can be difficult. You’re venturing out into the world for the first time and expected to pay all of your own bills and take care of all of your own expenses. However, throwing an expensive student loan bill into the mix at this point can be hard to say the least. For some students it may be impossible. That’s why a graduated repayment plan may be perfect for you. You will be responsible to pay a lower amount each month at first, but as you become more established in your career, you will need to pay higher payments. This way, you don’t break your budget. However, you may end up paying more in interest in the long run.
Extended Repayment
The extended repayment plan allows you to have low monthly payments for the duration of your loan. For many student loans, you can extend the repayment period to up to 25 years. This, of course, will cause you to owe more interest, but it can make for a more manageable monthly bill.
Income Contingent Repayment
The income contingent repayment plan is perfect for those individuals that wish to work in a field that does not exactly pay a lot per month. Basically, if you intend on working in public service, this plan is right for you. Your monthly payments will be based on how much you currently owe, how much money you bring home and how large your family is.
Income Sensitive Repayment
Another option is the income sensitive repayment plan. It is very similar to the income contingent plan but you do not need to have a public service job in order to qualify. You will definitely end up paying more in interest, but it can help you maintain good credit and avoid going into default on your loan. You will need to apply for this plan, as it is based on your monthly income and the amount of interest on your loan.
Nothing about student loans is cut and dry. In fact, you can find a repayment plan that suits your life and your needs without too much trouble. All it takes is a little bit of research and little bit of effort on your part.