Repayment Of Student Loans

November 16, 2011

Repayment of Student Loans

Repayment Of Student Loans

Before we get into the details or repaying student loans, if you happen to land on this page searching for methods on paying off your debt fast, or just want to check out debt elimination methods after you are done reading the article, you can check out this link: Repayment Of Student Loans.

Repayment of student loans usually begins with most lenders, after the grace period that they grant you, which can be anywhere from 3 to 9 months after either the student graduates, or after dropping out. There are various student loan repayment methods that you can use, depending on several factors, and consist of:

  • Standard Repayment Plan – Repayment of student loans through the standard plan is for those who are looking to get out of debt fast, with the repayment timeframe usually being 10 to 12 years, where at the end you are completely out of debt with that particular lender.
  • Graduated Repayment Plan – This student loan repayment methods allows one to start out with low payment, payments which can be as low as 5 dollars a month, and as time goes by the payment gradually increases. Increases in repayment amounts happen ever year or two, which can be a great option for those who are searching for a job and need small payments but will be able to afford to pay larger payments later on in their career.
  • Extended Repayment – Repayment of student loan debt through the extended repayment plan allows one 25 years to pay off their loan, and can be combined with the graduated repayment plan, which is used for the sole purpose of lowering your monthly payment but coming with the price of staying in debt longer.
  • Income Based Repayment – Also known as “income sensitive repayment”, this method is where the individuals monthly payment is based of of how much their earn each month, the payment being around 10 to 15 percent of what their monthly earnings are. If in the event that the individual hasn’t paid the debt off completely after the 25 year term has concluded, then whatever is left on the total amount owed will be considered as taxible income.
  • Income Contigent Repayment – With this plan, if income is below a certain level, payments can actually be $0. The amount individuals pay through this repayment of student loans method is up to “20 percent of their discretional income”.

Repayment Of Student Loans Through Forgiveness

Repayment of student loans can also be done through the likes of student loan forgiveness. Student loan forgiveness can be found through different methods, but the most popular forms of forgiveness are found through:

  • Federal Student Loan Forgiveness – This is where one will work a public service job that at the end of 10 years, the rest of their loan debt will be forgiven. This requires the individual to repay 120 on time payments over the course of the 10 years in order to qualify. There are also designated programs for; teachers, lawyers, nurses and other professions with similar rules.
  • Community Service – Repayment of student loans through community service work forgiveness can be found through organizations like VISTA, Peace Corps and Americorps, where they offer either a lump sum after each year of service which is to be used to pay off student loan debt, or will pay off a percentage of your loan for each year of service, usually 15 to 30 percent each year.
Category: Student Loan Database, Student Loan Repayment

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