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2021 Guide to Federal Student Loan Repayment Program

student loan repayment

It is no mystery that graduating from college is one of the most unforgettable experiences in human life. But it also means entering the real world with its financial responsibilities and problems. Statistics show that now, student loans are over 1 trillion dollars in the world. So, the students have to look for student loan repayment strategies. Now the numbers are catastrophic; it means the issue affects every corner of the world. So there should be ways that may take the students and families out of trouble. In this article, we will look at the possible ways. And we will also mention which strategies you should include in your student loan repayment program.

Why is student loan repayment a huge issue?

Well, the answer is quite simple. It is effortless to get loans. It demands only some documentary staff and a few form filling. And there you have your money. But paying them back is not as easy as taking. That is why statistics show vast amounts of student loan debt. Paying it off is not like waiting for the bill and making your payments. It is much more complicated than that. The strategies we will mention below are the possible ways to get out of this trouble. 

Student loan repayment plansstudent loan repayment

Some of them may seem appropriate to you more than others. But still, all of them are worth trying. And they are the most effective methods we have picked. They are highly effective and cover some of the best student loans. It would be better for students to be careful about their investments, after all. It would guarantee that there will not be this kind of problem for them. But, if you have got a problem, why not try the best ways to solve this?

Standard Loan Repayment Plan

For the loans that have no debt consolidation, it may be very significant. The Standard Repayment Plan includes fixed payments. These should be in less than ten years. And it also has a minimum repayment period. It may help you to save your money. Because over time, your monthly payments will be meager. And there are both positive and negative sides of this student loan repayment method. 

On the positive side, we should mention that over ten years, you will care less about the repayment. Because you will have other expenditures that surpass the repayment money. And the other factor is the fixed payments. IT means you will know exactly how to pay every month. For people with constant income, this may be the best student loan repayment plan. But we should also mention monthly payments on the negative side. Because in comparison with other methods, the fees are very high. The other factor is that you should pay regularly, so if your income drops, there will be big problems. 

Graduated Repayment Plan

Another available student loan repayment plan is the Graduated Repayment Plan. It includes lower initial payments. But these will increase every two years. Again, it is one of the best ways if there is no loan consolidation. And like the Standard Repayment Plan, time is less than ten years. During this period, you should note that your monthly payments will be higher than interest payments.

This may be the best for the type of people that want to finish off their debts quickly. But again there are two sides of this student loan repayment program too. Positively, it may set you free faster than other repayment plans. And for beginner students, the expenditures are low because monthly repayments increase only over time. But there are cons too. It is possible that you will not have a growing income, so there is no guarantee that you may handle it. And in comparison, you will pay more than Standard Repayment Plan. So the prospects are extremely vital for this plan. 

Extended Repayment Plan

student loan repaymentWhen it comes to student loans, extending the repayment period is exceptionally vital. With the Extended Repayment Plan, you may increase this period up to 25 years. If you are looking for a low monthly payment, this one is for you. It may be suitable for other types of people too. For example, for the people that have high income alongside equally high obligations. 

There are again, good and bad sides of the issue. There are lower monthly payments than the other two plans we have mentioned. And the monthly payments will be graduated or fixed, which demands flexibility. However, there are negatives like having more than 30000 dollars in Direct Loans. In this student loan repayment program, you should be very careful to consider all these. 

Income-Driven Repayment Plan

In this plan, the payments are affordable for your situation. It means that Income-Driven Repayment Plan collects data about you to determine what you may afford monthly. The repayment period is between 20 and 25 years. If you do not fully repay your federal student loans, there will be a loan forgiveness program for the remaining loan balance. There are four different types of student loan repayment programs. 

REPAYE (Revised Pay As You Earn Repayment Plan)

The plan makes your monthly payment at 10 percent of your discretionary income. If all the studies are undergraduate, your payment period is about 20 years. In case the loans are for graduate studies, the period is nearly 25 years. If you have a high balance and modest income, you should give this a try. There are a lot of pros to this plan. First, everyone with eligible federal loans may make payments in this program. The other is the loan forgiveness we have talked about.

In comparison, monthly repayments should be lower than the Standard Repayment Plan. However, there are drawbacks too. There is a lot of paperwork. For example, every year, you should certify your family size and income. Other than that, your salary and family members may also put you in a difficult situation. 

PAYE (Pay As You Earn Program)

Pay As You Earn ProgramIt is better for people with high loan balances. It may sound the same with REPAYE, but there are differences. In PAYE, it does not matter how much money you earn. Your monthly payments will be on the same level as the Standard Repayment Plan. The positive sides are about loan forgiveness and stable repayments. The second will be very convenient if your monthly income increases. Negative is that you may pay more on interests rather than monthly repayments. And that would be because of long repayment periods.

IBR (Income-Based Repayment Plan)

In this student loan repayment program, your monthly payment will never be more than the Standard Repayment Plan. There is also a decent option for people who seek Public Service Loan Forgiveness. And the negatives are similar to the ones we have mentioned. You should recertify your annual income. And the repayment period is also very long like in PAYE.

Income-Contingent Repayment Plan

It is like the collection of all the plans we have mentioned before. Loan forgiveness, family size, Public Service Loan Forgiveness are all on the positive side. Period, income, and recertification are on the other side of the coin. After all, you should choose the best student loan repayment plan for you. It is all about the future, so the instincts and wise analysis will help you on the way.