Student loan repayment options allow for more flexible payments in times of financial hardship. Both Federal Direct Loan and
Federal Family Education Loan (FFEL) program offer repayment options. For private student loans borrowers are advised to contact their
lenders and check what is available to them. Very often lenders are willing to work things out, before they allow for a default.
The most important student loan is the one with lowest interest rate.
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Repayment Option Overview
Federal Direct Loan Program and Federal Family Education Loan (FFEL) Program
offer very similar repayment options and they are generally the same. However, Direct Loan program providers an income contingent repayment plan and the FFEL program offers an income sensitive repayment plan.
The repayment periods for federal Stafford loans vary from about 10 to 25 years. You will need to select the plan that fits your financial situation.
Depending who provided you with the student loan you will have the option to buy this protection insurance from the federal government or private institution.
Repayment Plans
Here is a list of federal repayment plans. They will be available for both FFEL and Direct Stafford loan borrowers:
Standard Repayment Plan
Standard repayment options will have a fixed annual repayment amount paid over a fixed period of time not to exceed 10 years.
Graduate Repayment Plan
Graduate repayment option requires to be paid over a fixed period of time not to exceed 10 years, but with this plan, your payments start with a relatively low amount and then they will
increase about every two years.
Extended Repayment Plan
This plan has a fixed annual or graduate repayment amount to be paid over a period of time. The period can not exceed 25 years. In case you are a
Federal Family Education Loan (FFEL) Program borrower you must have more than
$30,000 in outstanding FFEL loans. If you are a Direct loan borrowers you must also have more than $30,000 in outstanding loans.
Income Contingent Repayment Plan
Income Contingent Repayment plan also known as ICR is a plan for Federal Student Loans from the
Federal Direct Loan program.
Income Sensitive Repayment Plan
This plan is targeted for Federal Family Education Loan (FFEL) loans where private
lenders provided the funds. With this program your monthly payment is based on your annual income. As your income increases or decreases, so do your payments.
The maximum repayment period is 10 years and you should contact your Student Loan Lender
for more information.
Income Based Repayment
Program also known as IBR, is a new repayment option for both FFEL and Direct loan programs as of July 1, 2009. Borrowers must demonstrate partial financial hardship.
Under this program your monthly payment will be based on your income during any period when you have a partial financial hardship.
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Student Loan Tips |
Q: Take Out Student Loans As The Last Resort
When you try to get all types of Financial Aid and you do not receive anything or if the amount of money is not enough try borrowing money by taking out loans.
Q: Use Your Grandparents
Everyone talks about parents, but very rarely do we hear Grandparents. They can take out a Loans and help you store some of the assets.
Q: Apply For Student Loans On the Same Day
We are not sure if this tip is valid, but if you have to apply for more than one student loan (different banks) do it on the same day. This will prevent the second bank to see your first loan on the credit history and it will be easier to get qualified.
View All Tips
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Important Questions |
Q: How long will it take to apply the forbearance to my account?
It takes at least 5-7 business days for a forbearance request to be approved or rejected. You will receive an acknowledgement in the mail if your forbearance request is approved and applied.
No further action is required from you. If the request is rejected due to incomplete information, you will be notified by mail and you may resubmit the request.
Q: Is there a penalty for putting my account in forbearance?
There is no penalty for putting your loan in a forbearance status. However, keep in mind that interest still accrues and is your responsibility during the forbearance. You may pay the interest during
the forbearance period or have it capitalize (added to the principal balance) at the end of the forbearance period.
Q: Are interest payments required during deferment?
No. The borrower may choose to defer interest payments, as well as principal payments, while the student is in school. However, unpaid accrued interest is capitalized at repayment and increases the
repayment amount. To reduce the overall cost of the loan, borrowers should consider making principal and interest payments while the student is in school.
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There are many repayment options when it comes to Student Loans. Both federal student loan programs offer flexible repayment
options in times of economic hardship. Private lenders also provide loan modification options and you must contact them directly to find out what is available for you.
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