When graduates leave college after completion of their degree programs, they have six months of grace period before paying back their loans. If you are experiencing financial hurdles in paying back your loan then you can be relaxed by altering the payment plan. These are some of the most commonly available student loan repayment options. Check with your lender for additional options and to change your repayment plan.
Standard Repayment Plan:
This is the repayment plan offered by your lender. You make payments for up to ten years. Your monthly payments are higher than in other plans, but your total payments are lower because you pay less interest.
Graduated Repayment Plan:
Under a graduated plan, payments start out low and increase during the repayment period, usually every two years. This is a good option if your income is low when you graduate but will increase quickly.
Extended Repayment Plan:
An extended plan allows you to stretch your repayment over a period of up to 25 years, depending on your loan amount. To be eligible for this plan, you must have an outstanding loan balance of more than $30,000.
You can combine an extended plan with graduated payments, which will lower your payments even further but will increase your overall costs even more.
Income-Based Repayment Plan:
If your income is low or unstable, an “income-contingent,” or “income-sensitive,” repayment plan may be right for you. As your income rises or falls, so do your monthly payments. The amount of your payment is refigured every year, based on your annual income, household size, and loan amount. Though available plans depend on what type of loan you have.
Direct Loan Income Contingent Repayment Plan:
If you have a federal Direct Loan (other than a PLUS loan), you can opt for an income contingent repayment plan. The amount you pay cannot exceed 20% of your discretionary income that is, your annual gross income less an amount based on the poverty level for your household size
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