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Student Loan Repayment Options



The average student loan debt is more than $35,000. If you are ready to start repaying your Federal student loan debt, there are several repayment options available to you.

Most borrowers start with the standard plan and adjust their repayment option as needed. There are 3 repayment plans that have 10-15 year loan terms, with fixed or graduated payments and typically cost the least in interest.

a. Standard repayment plan
i. Up to 10 years
ii. Plan with the least amount of interest paid over time


b. Graduated repayment plan
i. Up to 10 years
ii. Payments increase every two years


c. Income-sensitive repayment plan
i. 15 years
ii. Payments based on annual income


The next set of plans has longer repayment terms of 20-25 years. Borrowers repay their debt based on a few factors, like income and family size. Some debt might even be forgiven after enough payments have been made.


d. Extended repayment plan
i. Fixed or graduated payments
ii. Up to 25 years


e. Revised Pay As You Earn repayment plan
i. Payments are recalculated each year and are based on your updated income and family size.
ii. After 20 or 25 years of qualified payments, loan is forgiven


f. Income-based repayment loan (IBR)
i. Payments change with income and other factors
ii. After 20 or 25 years of qualified payments, loan is forgiven


g. Income-contingent repayment plan
i. Payments based on individual situation: family size, gross income and total amount of loans
ii. After 25 years of qualified payments, loan is forgiven

Now let’s compare three repayment plans for a single person, making a $28,000 salary, living in New York State, with $30,000 of student loan debt at a 5% interest rate.

 

Type of Repayment

Lowest Payment

Highest Payment

Length of Repayment

Total Debt Repaid

Total Debt Forgiven

Standard Repayment

$318

$318

120 months

$38,184

$0

IBR New Borrower

$85

$318

240 months

$47,310

$8,366

Revised Pay As You Earn

$85

$409

255 months

$53,636

$0

 

In this example, the standard repayment plan results in the least debt, but the other two repayment options have a lower initial payment that increases over time.

If you are struggling with student loan debt repayment options, ACCC can help sort out the confusion.

Visit ConsumerCredit.com to learn more student loan repayment options.

 

 

 

 

American Consumer Credit Counseling (ACCC) is a non profit credit counseling agency offering services such as debt advice, debt consolidation programs, and consumer bankruptcy counseling. We have provided thousands of families with financial counseling and helped them with consolidating bills and paying off credit cards. For consumers in need of bankruptcy counseling, ACCC is approved by the Department of Justice to provide both pre bankruptcy credit counseling and post-bankruptcy debtor education.

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Video: Student Loan Repayment Options

With so many debt payment options it's hard to know what option is best for you. Some people think that all options to pay down debt are the same and, worse, some people think that all options are scams. Today, we're going to talk about one of those options, which is debt consolidation. Debt consolidation is when you take out one large loan to pay off other smaller loans. A benefit to having a debt consolidation loan is that you'll have to have one monthly payment as opposed to having to pay each of your loans separately. The interest rate on your consolidation loan needs to be lower than the interest rates on the loans you're consolidating. Keep in mind that if you have a lower monthly payment on the consolidation loan this can result if having the loan lengthen over time. This could then result in having to pay more interest over time. For more information visit us at consumercredit.com.