The federal student loan repayment programs allow agencies to pay Federal insured student loans as a recruitment or retention incentive for candidates or the agency’s current employees. Student Loan Repayment Program 5 U.S.C. 5379 authorizes agencies to set up their own repayment programs to attract or retain highly qualified employees.
In the USA, student loan debt has been at a critical level for the past ten years. Leigh Gross, from CommonBond, said that there is a 1300 % increase in the average cost of a college education since 1971, leaving far behind inflation or wage increases.
It also leads to a hindrance to obtaining a bachelor’s degree to achieve career success.
Well, I will show you the main student loan repayment programs in 2019. Here you can see what options are available for students and other useful information.
Standard Student Loan Repayment Program
If you do not choose between others, you are automatically assigned to this repayment plan. It saves you money over time, as your monthly payments may be slightly higher than payments made in other projects, but you pay your credit as soon as possible.
In this Student Loan Repayment Program, payments are a fixed amount that allows your loans to be paid within ten years (in 10 to 30 years for Consolidation Loans)
All borrowers are eligible for this plan.
Usually, you pay less time than in other plans.
A standard student loan repayment program for consolidation loans is not an appropriate PSLF repayment plan.
Extended Student Loan Repayment Program
You have to owe more than $ 30,000 in Direct Refund Debt, and you must have an outstanding balance on a Direct Credit from October 7, 1998, to qualify for this repayment program. This is a good plan if you are going to pay smaller monthly payments.
Payments can be fixed or gradual and will allow your credits to be paid within 25 years. Since the repayment period is 25 years, your monthly payments will be less than the standard repayment program. You will pay more interest. Its reason is that your loan is on a more extended loan repayment plan.
Your monthly payments will be lower than following the 10-year standard plan or phased payment plan.
You will pay more over time than the standard plan for ten years.
Not a suitable redemption plan for PSLF.
GRADUATED Student Loan Repayment Program
Your payments start at a low level but increase every two years, but no refund will more than triple the sum of the past debt. If you expect your income to increase gradually over time, this plan may be best for you.
You will pay more over time than the standard plan for ten years, but payments become more comfortable as your income increases over time. Generally not a suitable redemption plan for PSLF.
Income Based
This repayment plan requires you to demonstrate partial financial difficulties and based on income, family size, and state of residence.
Your monthly remittances will be ten or fifteen percent of discretionary income (depending on when you received your first loan), but not more than you would have paid under the 10-year standard repayment plan.
Payments are recalculated yearly and based on your updated revenue and number of family members.
It is a rule that you should update your revenue and family size every year, even if they have not changed.
If you are not single, your spouse’s revenue or loan debt will be counted only if you file a joint tax return.
All kind of outstanding balance on your loan will be forgiven if you do not repay your loan in full in 20 or 25 years, depending on when you received your first loan.
It is possible that you should pay income tax on any sum that is forgiven. Although over time you pay more for a loan, payments are lower than in the standard plan. You can claim forgiveness of the outstanding balance only after ten years, but you can pay income tax on the forgiveness amount.
Income Contingent
If you do not have financial difficulties, but you have a low income, this program may offer you some flexibility.
Payments are recalculated yearly and based on your updated income, family size and the total amount of your direct loans.
You must update your revenue and number of family members yearly, even if they remain unchanged.
If you are not single, your spouse’s salary or credit debt will be counted if you decide to pay off direct loans with your partner.
All kind of outstanding balance can be forgiven if you have not repaid your loan in full within 25 years.
Although over time you pay more on your loan, your outstanding balance can be forgiven after ten years depending on specific requirements. You can pay income tax forgiveness.
INCOME SENSITIVE
The income-based repayment plan is intended for borrowers in low-paying jobs. This repayment plan is a short-term solution for borrowers facing severe financial problems. Only federal family educational loans (FFEL) are eligible. From 4% to 25% of the gross monthly income of the borrower. The borrower chooses what percentage to pay.
Using an ISR for more than 1-2 years will significantly increase the amount of interest you pay on loan. If financial problems continue, consider the possibility of combining loans.
You will pay more over time than the standard plan for ten years.
PAY As You Earn
This plan is synonymous with Obama’s student loan plan. If you face with partial financial difficulties, this plan offers you a minimum monthly amount of payments from the repayment plans, depending on your income, family size, and condition of residence.
This plan is 10 percent of your discretionary income, which is based on a formula that includes your adjusted gross income, family size, and staff. They have adjusted annually.
Lower payments than the standard plan. Continue to make payments under this plan, even if you no longer have financial difficulties. The outstanding balance can be forgiven in 10 or 20 years depending on the specific qualifications. You can pay income tax forgiveness.
You should update your revenue and the number of family members every year, even if they have not changed.
If you are not single, your partner’s revenue or loan debt will be counted only if you file a joint tax return.
All kind of outstanding balance on your loan will be forgiven if you have not repaid your loan in full in 20 years.
Conditions
You must be a fresh borrower after October 1, 2007, and receive a direct loan payment on or before October 1, 2011. It would be okay if you had high debt relative to your income. Your monthly student loan repayment program will never exceed the amount of the standard plan for ten years. You usually pay more over time than the standard 10-year plan. It is a rule that you should have to pay income tax on any amount that is forgiven. From the table below you can see eligible loans for all programs.
