5 Ways to repay your Student Loans
Are you feeling the pinch of your Federal student loan payment and wondering where the pressure release valve is? Well, take a step back and breathe. Ahhhhhh, You do have quite a few options. There are many programs available to ease the financial pressure of paying your student loans. They include everything from lowering your monthly payments to having your debt completely forgiven. This article will go over the different repayment options available. Although repayment can help make your loan affordable it makes sense, many times dollars, to investigate actual forgiveness programs based on your career path.
Student Loans Forgiveness: What’s the first step?
This may sound rudimentary but the first step is to really be real with yourself around your finances. Do a quick budget. What do you have to commit to your student loans? Now let’s explore which repayment option bests suits your needs. Keep in mind that you need to qualify for each of these options.
What is available for Student Loans Forgiveness?
1. Standard repayment
Now that you’re done with school your loan will be automatically placed into the standard repayment plan. You will have a level payment that includes principal and interest. This will remain in effect for the life of the loan, typically 10 years, unless you change it.
The next 4 payment options will typically cost you more interest because you are given more time to repay.
2. Graduated repayment.
You can have your payments reduced by up to 50% for up to 4 or 5 years. After that period of time your payments go back to the standard repayment amount. Click here to find out more.
3. Extended repayment
This plan can save you a lot of money on a monthly basis and can extend your loan out as far as 25 years. That is a long time and will ultimately cost you much more in interest payments. You must have at least $30,000 in loans to qualify. Click here to find out more.
4. Income-Sensitive repayment
This program allows you to adjust your payments as percentage of your income. Typically you can choose to pay between 4 – 25% of your monthly income as long as your payment includes the interest due. You will need to apply every year to continue on this program. Click here to find out more.
5. Income-Based repayment
This is similar to the Income-Sensitive approach but takes into account more determining factors other than income such as your state of residence and family size. This program is mainly for folks who can prove a financial hardship or have very high student loan debt vs. their pay. This will cap your monthly payment at 15% of your discretionary income. Also this program can stretch your payments as long as 25 years and if at the end of those 25 years you still have a loan balance it may be eligible for forgiveness. Click here to find out more.
Use this calculator to see what repayment program is best for you.