Good Morning Our Little American College Graduate, Welcome To Debt!
CONGRATS GRAD, YOU DID IT, and we are damn proud of you!
Do you want to talk about student loan repayment plans?
If you are like me, (and 44 million other Americans) that little piece of paper educational institutions call a diploma, cost you quite the pretty penny. To make it worse… that 6 month grace period sure did fly by, didn’t it!?! Yes, it did. Now what?
I guess the first thing would be the “exit counseling” on the federal website, but even after that, most people STILL don’t understand all their repayment options… so here they are as simple as simplified gets..
First things first… there are eight different kinds of student loans, in this article, we will be solely focusing on federal student loans and their 9 repayment options
- Standard Repayment -10 years- Fixed monthly payments of at least $50.
- Graduate Repayment-10 years- Payments start low and increase every 2 years over the course of 10 years
- Extended Fixed Repayment-25 years – Fixed monthly payments of at least $50
- Extended Graduate Repayment-25 years- Payments will start low and increase every 2 years.
I know what your thinking… JENESSA, YOU SAID 9 OPTIONS BUT ONLY LISTED 4, WHAT THE HECK!!
The next 5 are options are called Income Driven Repayment Plans (IDR).. and THEY ARE AWESOME.
They are payments primarily based on your income & family size, and can be as low as $0 A MONTH! But that’s not even the best part..
They offer loan forgiveness after 20 or 25 years of qualifying payments (depending which plan you choose)… even if those payments happen to be $0/month. They are also the best option for those seeking PSLF (Public Service Loan Forgiveness)
You may have to pay taxes on the total amount forgiven.. but that’s a different story for a different blog
- Income-Contingent Repayment-approx. 12.5 yrs- Monthly payments are 20% of income (But never more than Standard Repayment Options)
- Pay As You Earn-20 yrs- Monthly payments are 10% of discretionary income.
- Revised Pay As You Earn-20 yrs OR 25 yrs-Same as PAYE explained above, revised for graduate & professional studies to be given 25-year term.
- Income-Based Repayment-approx. 20 yrs-Monthly payments are 10% or 15% of income (depending on when you received your first loan)
Again, these are simplified!! There are a number of factors that go into deciding student loan repayment plans: are you seeking PSLF, what is your discretionary income, do you have parent plus loans, what much private loans do you have, do you have Perkin loans, are you a FFEL borrower?
Don’t worry, we are here to analyze all of it for you and get you set up with the best plan for your situation! Give us a call! (888) 809-4BNB!