REPAYMENT OF STUDENT LOANS

Posted on April 19, 2013 by Susan Peel

You will begin repaying your federal student loans six months after you leave school.  You have a variety of repayment plan options and have the opportunity to change your repayment plan at least annually. It is the responsibility of the borrower to contact the loan holder if repayment plan changes are needed.

Basic Repayment Plans (Calculator)

  • · Standard Repayment: Repaying the loan in equal monthly payments of at least $50 for the life of the loan up to 120 months (10 years).
  • · Graduated Repayment: Repayment begins with a lower monthly payment and increases so that the loan is paid-off in 120 months (10 years).
  • · Extended Repayment: Available to the first-time federal student loan borrower after October 7, 1998. Students MUST HAVE at least $30,000 in Direct Loans OR at least $30,000 in FFELP loans. 

 Additional “income related” plans

  • · Income-Based Repayment (IBR): Available to help to FFELP and certain Direct Loan borrowers, this program uses your income, family size, and total student loan debt to cap your monthly payments at 15 percent of your discretionary monthly income. If a balance remains after 25 years of qualifying payments, IBR forgives any remaining debt. Review NSLP’s IBR fact sheet for frequently asked questions.
  • · Pay As You Earn: Available to qualifying Direct Loan borrowers, this program uses your income, family size, and total student loan debt to cap your monthly payments at 10 percent of your discretionary monthly income. If a balance remains after 20 years of qualifying payments, Pay As You Earn forgives any remaining debt.
  • · Income-Contingent Repayment: Available for Federal Direct Student Loans only, this plan adjusts the monthly payment annually based on the most recent tax year’s adjusted gross income (AGI), family size, and total amount borrowed. The loan term is 300 months (25 years).
  • · Income-Sensitive Repayment: Available for Federal Family Education Loan Program loans only, this plan provides for annual adjustments to the required monthly payment based on total income. The loan term is 120 months (10 years). Because the full balance is still paid in 10 years, this plan is often used only as short-term relief.

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