Don’t Be Confused/Get Schooled: Five Student Loan Repayment Options That’s Sure To Lower Your Payments and Stress
Too many students and parents are confused by the terms and agreements that come with taking out private and federal student loans. They may not understand the student loan repayment terms and can end up in some serious financial trouble. There are at least five repayment options students can opt for but each one has their own guidelines and stipulations. For people struggling with their student loan payments, consider the options in the article below.
If you take out a student loan, you’re in for some major financial responsibility. The only problem is college students don’t have any choice in the matter when it comes to affording college; they must take out some type of loan. Since they are forced to take out loans to get their education, they may not realize what kinds of student loan repayment options they have.
Five Repayment Options Sure To Keep Money In Your Pocket
When you’re tired of forking over your hard earned cash to your student loan lenders, consider the five repayment options listed below to help you keep that money.
Option 1 – Standard Repayment
The majority of people will use the standard repayment plan, either because they choose to or get thrown into it. What does this repayment plan do for you? It means that every month you will pay the lender the same payment amount. Your payment amount will change only when the interest rate changes or you’re at the last stretch of the plan. When this happens, the rate will lower.
Most lenders will automatically place you on this type of student loan repayment option since it’s what most people expect. However, make a request for a different plan and lenders will do what they can to keep you happy.
Option 2 – Graduated Repayment
This option is quite convenient because it’ll adjust as your career takes off. Chances are you won’t have a high paying job the moment you get out of school so it’ll be rough the first couple of years. It can be difficult paying for your student loans and taking care of your other bills right out of college. Thus, comes the graduated repayment option from your lender. What it does is allow you to make a low monthly payment in the beginning and as you get established, your loans will be higher. While you won’t break your bank, you will pay more interest.
Option 3 – Extended Repayment
With this student loan repayment option, you can have low monthly payment for the length of your loan. When people opt for this repayment plan, the repayment period can be extended to 25 years. Again, you’ll end up paying dearly in interest but the bill is manageable.
Option 4 – Income Contingent Repayment
This type of plan is great if you want to work in a field that doesn’t pay a lot. For instance, if you plan on working in public service, you may want to have the income contingent repayment plan. The payments for the plan are based on three things.
- What you owe presently
- What your bring home money is
- How many in your family
Option 5 – Income Sensitive Repayment
The last student loan repayment option is the income sensitive repayment plan. Quite similar to the above section (income contingent repayment plan), the income sensitive repayment plan will look at the income you make but you don’t need to work in the public service sector. This option does cost you more money because you end up having more interest added to your student loan. However, maintain the good credit you have and avoid defaulting on the loan. If you want this plan, you’ll need to apply for it. After all, it’s based on your income each month and how much interest is on the loan.
Remember, there’s nothing simple about a student loan repayment plan. However, with a bit of research and time, you can find the plan that’s best for you and your current and future income.
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