Student Loan Repayment Options – Can You Make Repayments During Your Education?
What student loan repayment options are available to you? Most students learn about the options available to them at orientation. They may also learn about loan consolidation and deferment. But there is another option that few students discuss with any depth or detail. This is the option of rolling loans over into a new student loan and beginning a new student loan repayment process. Here are some tips on student loan repayment options you should consider for your next student loan.
Best repayment option: graduated repayment schedule. Under this plan, you earn payments that progress according to your degree level. For instance, if you begin with a $100 a month payment for your first six months, then you will make a payment of $120 each month until you have finished your degree. Gradually, your payments will increase to a total of nearly $200 for your first five years of graduate school. Once you have finished your education, you will stop making payments and your debt will be written off. If you are going to use this option for federal student loans, you must be enrolled at least half-way through your degree program at your school of choice.
The second most common student loan repayment options available to graduates are the graduated payment plan and deferment. Both of these options involve monthly payments that progress as you pay off the loan. With a graduated payment plan, your payments will finish out over ten years; with deferment, your payments end after a certain period of time (typically five to seven years) depending on whether you earned an undergraduate or graduate degree. Both of these repayment plans require that you begin to repay your loans before you begin your employment, but you do not have to start making payments immediately.
Next, students need to understand the difference between subsidized and unsubsidized student loan repayment plans. Subsidized plans are provided by the government to their students. Students who qualify can receive federal loans at low interest rates and subsidized rates start at zero. Students who do not qualify can still pursue subsidized loan repayment options by working part-time while attending school or enrolling part-time in a university or college. The government also offers subsidized loans to college students, but interest rates are higher than those offered in subsidized plans.
Once you understand the differences between the two student loan repayment options, the best student loan repayment plan becomes clear. The best plan is one that allows you to pay off the debt faster, so you are able to get out of debt faster. Ideally, your debt should not be left unpaid for long periods of time. The longer you stay in debt, the larger the negative impact on your credit rating.
Before you choose any student loan repayment options, it’s important to understand your student loans and the options available to you. Depending on the type of loan, the repayment terms can be very different. For example, private student loans often have repayment terms of 30 years, while federal student loans have a repayment term of only ten years. If you are in school and want to know how to pay off the debt faster, it’s important to get a full understanding of the private student loan repayment options as well as those for federal student loans.
Some students don’t like to consider the actual repayment period because they want to get out of debt sooner rather than later. If this is the case, there are a few repayment options available to you. One option is to add an in-school repayment term to your student loan. This will allow you to defer your payments until you either finish school or find employment after you graduate.
Another option is to get a forbearance. Forbearance will temporarily halt your loan payments during the time that you are completing your education. This may sound bad, but many banks will actually give you a forbearance in order to allow you to go to school and attend classes. After you graduate, you can then begin to make payments according to your modified loan terms. In some cases, this option will allow you to start making payments immediately and avoid missing any of your school financial obligation.