6 Tips for Student loans – What Are Your Payoff Options?
Are you facing difficulty in repaying your student loans? If yes, you can get help of the student debt relief programs to pay off your outstanding debts. You can pay off the federal student loans with the help of such repayment plans. As for the private student loans, you may have to consolidate these separately. Other than the repayment plans, there also are various options like that of forbearance or forgiveness, deferment and so on, for federal student loans. You can choose one according to your suitability.
Types of student loan repayment plans
The US Department of Education administers Perkins loans, FFEL (Federal Family Education Loan) programs and ‘Direct Loan’ programs. The Direct Loan programs and FFEL programs consist of Stafford loans (for the students) and PLUS loans for the parents who fund their child’s education.
Following are some of the student loan repayment options through which you can pay down your FFEL Stafford and Direct Loans:
1. IBR or Income-Based Repayment Plan – The IBR is the most favored repayment plans. If you opt for this plan, you will be required to make payment every month, on the student loans. The amount you will be required to pay depends on the income and the financial hardship you are in. The payment amount is adjusted on an annual basis. The strongest advantage of the IBR plan is that there can be the option for you to obtain cancellation of your outstanding loans. This is possible, only if you go on making payments on a continuous basis.
2. Graduated Repayment Plan – In case of the Graduated Repayment program, you are required to pay a really low amount in the beginning. This can increase in every 2 year. However, the least amount payable will have to be more than that of the accumulated interest, with regards to the amount of loan. This particular repayment plan is best suited for those who do not earn much at the present but there can be improvements in the future. The loan under this repayment option will have to be paid off in 10 years.
3. Standard Repayment Plan – The Standard Repayment Plan is the one where you are required to make a fixed payment every month. The minimum payment will have to be 50 USD every month. The total time available is 10 years.
4. Income-Sensitive Repayment Plan – This is the repayment option which help the students obtain freedom from the FFEL loans. The period within which you will be required to repay the loan is 10 years. The monthly payment amount depends on the monthly income.
5. Extended Repayment Plan – If you want to make payments through the Extended Repayment plan, the loan will have to be more than that of 30,000 USD on each of the loan.
6. Income-Contingent Repayment Plan – This plan can help you pay off the PLUS loans and also the Direct Loans. The payment amount which you will have to furnish every month depends on the family size, the annual income and the outstanding amount owed on the Direct Loans. In this case, the maximum time limit is 25 years.
Apart from the repayment plans mentioned above, you can also get student debt relief with the help of a consolidation loan. It is similar to a personal loan that you can take out from a financial institution. With the help of a consolidation loan, you can repay your existing student loans (both federal and private student loans) at once. However, you should assess your financial resources and make a budget plan so that you can pay off your consolidation loan within the stipulated loan term.