Need A More Affordable Repayment Plan For Student Loans

If you need a more affordable repayment plan for your federal student loans, you do have different repayment options available. Unfortunately these options only apply to federal student loans, private student loans are not eligible for these repayment plans. If you are having problems making your private student loan payments, contact your lender to see what can be done.

Standard Repayment:
The standard repayment plan is what you get with federal student loans right out of the box (meaning that if you do not specify a different option, this is what you get automatically). Standard repayment plans have the highest monthly payments, and monthly amount may vary if there is a variable interest rate.

Graduated Repayment:
If you think that you will be seeing fairly rapid increases in your income over time, then a graduate repayment plan may be a good option for you, because under a graduate repayment plan, your payments start low and then increase over the repayment period of your loans. A typical increase in payment takes place every 2 years, and for FFEL Loans and Direct Loans that entered repayment on or after July 1, 2006, the loan must be paid over a period of 10 years.

Extended Repayment:
You may qualify for an extended repayment plan if you have total outstanding loan principal and interest exceeding $30,000. If you do in fact qualify, you may repay on a fixed or graduated payment schedule for a period of no longer than 25 years. Extended payment plan is similar to consolidation, in the fact that your monthly payments will be less than under the standard repayment plan, but you will pay more interest over the life of the loan since the repayment period is longer. For example, on an unsubsidized Stafford loan, extending the repayment term from 10 years to 20 years will reduce the monthly payment by around one third, but the interest paid on the loan will double.

Perkins Loans Repayment:
Perkins repayment plans differ from Direct Loan and FFEL repayment plans, because Perkins student loans have minimum monthly repayment rates that are set by law. You need to contact your school to get exact Perkins repayment amounts. Here are some situations in which extensions can be grated for Perkins repayment periods: unemployment, serious illness, or qualifying as a low-income individual. It is important to note that your interest will continue to accrue during any extension of a repayment period.

Income-Based Repayments For Student Loans
To learn about Income-Based Repayment options please click here.

This is a basic overview of federal loan repayment options. You should check with your own lender for your specific financial circumstances and options available. These not all of the repayment options that may be available, as The Department of Education has the option to create alternative plans to accommodate exceptional circumstances for Direct Loan borrowers.