Yes, higher education is a dream for many students. But if a student is not able to get one of those scholarships or grants, they do not have to lose heart. Student loan is the answer for their search for money.
Students must be aware that this fund has to be repaid after the completion of the course period.
We have already learned about various student loans available from the federal government and other loan providing bodies. In this article, we shall discuss about the various loan repayment options that students should consider to repay their loans to prevent any unpleasant surprises during the higher stages in their career.
Following are the repayment plans available for students who borrow Direct Subsidized loans, Unsubsidized loans, Subsidized loans, Federal loans, and Stafford loans:
This plan enables students to pay less interest than any other plans. Under this plan, a student has to repay the loan in 120 equal payments for 10 years, that is, 12 payments per year. The number of years to repay the loan reduces based on the amount. The minimum amount to be paid under this plan is $50.
The monthly payment is calculated based on the borrower’s income that is 15% of the discretionary income. Thus, the amount changes as per the income.
In this article, we have discussed about various loan repayment options that a student borrower can consider based on the income after graduation and the time period required for repayment. In the next article, we shall discuss about education through online and its advantages.
Students must be aware that this fund has to be repaid after the completion of the course period.
We have already learned about various student loans available from the federal government and other loan providing bodies. In this article, we shall discuss about the various loan repayment options that students should consider to repay their loans to prevent any unpleasant surprises during the higher stages in their career.
Following are the repayment plans available for students who borrow Direct Subsidized loans, Unsubsidized loans, Subsidized loans, Federal loans, and Stafford loans:
Standard Repayment Plan:
When a student enters the loan repayment period, he or she is automatically assigned to the Standard repayment plan for the loan repayment. However, a student can change the repayment plan at any time.This plan enables students to pay less interest than any other plans. Under this plan, a student has to repay the loan in 120 equal payments for 10 years, that is, 12 payments per year. The number of years to repay the loan reduces based on the amount. The minimum amount to be paid under this plan is $50.
Graduated Repayment Plan:
Similar to the Standard repayment plan, a student has to repay the loan amount within 10 years. But the interest amount is comparatively higher in this plan. The interest amount increases every two years.Extended Repayment Plan:
In this plan, the loan repayment period is 25 years with less monthly payments compared to the 10-year standard plan. But, the overall payment is higher than the 10-year plan amount.Income-Based Repayment Plan:
Students with partial financial hardship are eligible for this repayment plan that runs up to 25 years. The monthly payments are lesser than the amount repaid for 10-year plan. Thus, a student pays more compared to the 10-year plan. After equivalent amounts are paid for 25 years, any outstanding balance is forgiven for which the student may have to pay only the income tax.The monthly payment is calculated based on the borrower’s income that is 15% of the discretionary income. Thus, the amount changes as per the income.
Pay As You Earn Repayment Plan:
As per this plan, 10% of monthly payment should be paid towards the loan for 20 years. This plan is applicable for student borrowers after Oct 1, 2007 and student borrowers of Direct Loan on or after Oct. 1, 2011. After equivalent amounts are paid for 20 years, any outstanding balance is forgiven for which the student may have to pay only the income tax.Income-Contingent Repayment Plan:
Monthly payment is calculated each year based on adjusted gross income, family size, and the total Direct Loan amount. Time period to pay the amount is 25 years. After equivalent amounts are paid for 25 years, any outstanding balance is forgiven for which the student may have to pay only the income tax.Income-Sensitive Repayment Plan:
Monthly payment is calculated based on annual income. Time period for the payment is 10 years. A borrower pays more than the standard 10-year plan. Monthly payment calculation differs with different lenders.Payment method for Perkins Loan borrowers
Perkins loan borrowers have to start paying the loan amount latest after nine months of graduation or opting to leave school or opting to leave below half-time from the enrollment. If the student opts to leave below half-time status, he or she need not repay the loan amount for certain period of time called the Grace period. The student should enquire with the school regarding the Grace period.In this article, we have discussed about various loan repayment options that a student borrower can consider based on the income after graduation and the time period required for repayment. In the next article, we shall discuss about education through online and its advantages.
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