6 Repayment plans to pay off your student loan debts
Are you facing difficulty to repay your student loans? If yes, you can take help of student debt relief programs to pay off your outstanding debts. You can pay off your federal student loans with the help of such repayment plans. Moreover, the student loan repayment plans come with flexible repayment options and you 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 graduate or professional education.
Go through the following lines to know about 6 repayment plans that help you to pay off your FFEL Stafford and Direct Loans.
1.IBR (Income-Based Repayment) Plan
It is one of the most popular repayment plans that offer student debt relief. Under this plan, you need to make a payment towards your student loans every month. The payment depends on your income during the period when you’re facing financial hardship and the payable amount gets adjusted annually. One of the greatest advantages of this repayment plan is that you may qualify for cancellation of the outstanding loans if you continue making payments for a specified period. The repayment period may exceed more than 10 years.
2.Graduated Repayment Plan
In this repayment program, you need to pay comparatively less in the beginning and the payable amount usually increases after every 2 years. The minimum payable amount (at the initial stage) needs to be more than the accumulated interest on your outstanding loan amount. This repayment plan is suitable for the individuals (like recent college graduates), who presently earn less but are expected to earn more in future. You need to repay the loan in full within 10 years of time.
3.Standard Repayment Plan
Under Standard Repayment Plan, you need to make a fixed monthly payment (a minimum of 50 USD per month) for a maximum period of 10 years.
4.Income-Sensitive Repayment Plan
This repayment offers student debt relief from FFEL Program loans. The repayment period is 10 years and your monthly payable amount depends on your monthly income; you need to pay more when your income increases and vice versa.
5.Extended Repayment Plan
In order to take help of this repayment plan, you should owe more than 30,000 USD in each of Direct Loans or FFEL Program loans. For example, if you have both the loans and you owe less than 30,000 in Direct Loans, then you cannot repay your Direct Loans with the help of this program; however, you can pay off your FFEL Program loans if you owe more than 30,000 USD on it.
6.Income-Contingent Repayment Plan
This plan is suitable to pay off your PLUS as well as Direct Loans. The monthly payments that you need to make under this repayment plan are dependent upon your family size, your annual income (including your spouse’s income if you’re married) and the total amount of your Direct Loans. The maximum repayment period is 25 years and you need to pay a tax on the forgiven amount (the unpaid amount after 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.