Introduction
Many people are forced to take out student loans in order to finance their college education. Unfortunately, these loans will eventually need to be repaid. There are several different student loan repayment plans that have been developed by banks for this purpose today. The plan that you are allowed to participate in will depend upon your employment and financial situation. However, there should be one that will meet your needs and ability to pay.
Types of Repayment
There are several types of student loan repayment methods available including:
- Standard repayment is the least expensive as payments remain the same throughout the term. This is the option that graduates are automatically placed on whenever they begin the student loan repayment process.
- Extended repayment is for graduates with over $30,000 in student loan debt. This will lower your monthly payment so that you will not have to apply for a new loan.
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Graduated repayment allows you to make low monthly payments in the beginning but they will gradually increase over the repayment period. With this type of student loan repayment you can opt to only pay interest for up to 4 years.
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Income Sensitive student loan repayment bases your monthly payments on a percentage of your income (between 4% and 25%). This is only good as long as you pay the accrued interest each month.
Benefits of Repayment
Student loan companies allow you to choose the student loan repayment plan that will work best for you and your financial situation. They simply want you to repay your loans so that they will get their money back. For this reason, they will allow you to only pay a small amount if you are on a tight income but they will also allow you to pay even more as your income increases.
Options For Defaulted Student Loans
Whenever you don’t pay back your student loans you can rest assured that there will eventually come a time when they will come back to haunt you because you have defaulted on them. You won’t be alone here though because a lot of personal debt that causes poor credit scores is caused by the inability to make these repayments. Unfortunately, there are not a lot of ways in which you can get out of repaying your student loans but there are student loan repayment options available for you.
Before you look into student loan repayment you need to have a concrete financial plan laid out. This means that you will need to know exactly what loans you need to repay. You can find this information out from 1800IwillPay.com, which is the Department of Education’s web site. Here you will also find repayment options laid out for you but sometimes there are other options that you will only find out about by calling someone who works for the Department of Education. Since you are no longer eligible to have your student loan repayment deferred or forbore upon you will have to be patient. Understand that your wages, tax returns and stimulus checks can be garnished whenever you are in default. Getting out of default is a long, hard process though.
