By: Mevish JafferFor most students, graduating from college is a fun and exciting time; however they can also feel scared and unsure about what the future holds. The uncertainty experienced is often heightened for those who have accumulated a significant amount of student loan debt, while gaining their education. Although lenders usually provide a six month grace period from the time students graduate until they are scheduled to make repayments, it can often take longer to find a job. This is why it’s important for borrowers to evaluate all available options when it comes to repaying student loans. The following repayment plans are some popular options for borrowers to consider:
1. Traditional Repayment Plans
This option involves a standard repayment plan, which is used for most federal student loans. When it comes to the student loan repayment rate, traditional plans usually offer a fixed interest rate, which means the monthly payment amount stays the same until the loan is paid off in full.
2. Extended Repayment Plans
When borrowers experience difficulty repaying their student loans, it can be possible to apply for an extended repayment plan. This type of student loan repayment plan allows borrowers to extend the repayment period of their loans. Borrowers also benefit by receiving a lower monthly payment when they opt for an extension.
3. Income Sensitive Repayment Plans
This method of attaining student loan repayment relief is characterized by the loan recipient’s income, which determines the monthly payment amount. In order to obtain an income sensitive repayment plan, applicants must be able to show proof of income. This information must also be submitted every year if borrowers wish to continue reaping the benefits offered by the plan. The major qualification requirement borrowers need to satisfy is being able to cover the loan’s interest in the monthly payments.
4. Graduated Repayment Plans
This type of student loan repayment plan allows borrowers to initially begin repayment with a low monthly amount. During the length of the repayment term, this amount increases gradually, providing borrowers with enough time to adjust. Although every lender has different stipulations, the monthly payments associated with graduated repayment plans usually increase every few years.
In addition to repayment plans, there are also alternative solutions for student loan recipients who are struggling with debt. One of them is student loan forgiveness; however the requirements and qualifications for eligibility are quite stringent and very specific. This is because the entire purpose of student loan forgiveness is to reward people who dedicate their lives to those who are less fortunate by offering their services. Therefore, individuals can receive student loan forgiveness if they fall under the following types of categories:
- Perform certain kinds of volunteer work (student services in AmeriCorps or members of the Peace Corps)
- Students who go on to become teachers in low-income areas
- Doctors and nurses who offer their services in poverty stricken areas or regions where medical care is desperately lacking
- Certain loan recipients who work in the field of law enforcement
Another option for students is to consolidate their debt into a single loan. Instead of making several payments to multiple lenders each month, students are able to make one monthly payment. Student loan consolidation also works to lower the borrower’s monthly payment amount and reduces interest rates. A student loan repayment calculator can help borrowers to accurately determine how much their monthly payment and interest rates will be. This computing tool can easily be found online on the financial aid website. With the different types of student loan repayment options and solutions mentioned above, college graduates can begin to find debt relief.
