There are a number of things you should consider before you apply for a school loan like, when to make monthly payments, what are the school loan repayment options, as well as what are the deferments and forbearance options etc.
There is a variety of school loan repayment options available. For example, Level Repayment Plan, Graduated Repayment Plan, Income-Sensitive Repayment Plan, Extended Repayment Plan and etc.
Level Repayment Plan:
This payment option helps you level your monthly installment, meaning that you pay the same amount every month until the interest rate changes. If the rate increases or decreases, your monthly payment amount is adjusted accordingly. It is the least expensive plan and is a good one indeed in the long run if you are able to make timely payments.
The following loans are available in the Level Repayment Plan:
- Stafford (subsidized).
- Stafford (unsubsidized).
- PLUS.
- Federal Consolidation Loan.
- Private Consolidation Loan.
Graduated Repayment plan:
This plan helps you to pay the monthly interest that accrues on your account. Monthly payments are low in the beginning and they increase with time. It may be a good choice if your current salary is limited but you expect higher earnings in the future.
The following loans are available for the Level Repayment Plan:
- Stafford (subsidized).
- Stafford (unsubsidized).
- PLUS.
- Federal Consolidation Loan.
- Private Consolidation Loan.
Income-Sensitive Repayment Plan:
It allows you to make a monthly payment that is calculated according to your gross monthly income. This will be the amount of interest due on your loans for that particular month.
The following loan options are available for the Income-Sensitive Repayment Plan:
- Stafford (subsidized).
- Stafford (unsubsidized).
- PLUS.
- Federal Consolidation Loan.
Extended Repayment Plan:
This plan may reduce your monthly payments by extending your payments over a period of up to 25 years. You can make payments over this extended period either under a level or graduated schedule.
The following loan options are available for the Income-Sensitive Repayment Plan:
- Stafford (subsidized).
- Stafford (unsubsidized).
- PLUS.
- Federal Consolidation Loan.
Things to keep in mind when considering repayment options
Initially your loans are set up for level repayment plan. It is recommended that you stick to this plan only if you are able to make monthly payments. If you want to opt for income-sensitive, extended repayment or graduated repayment plan, tell this to your lender. At times you have difficulty in repaying your loans. Try to consider the following options before you plan to switch your school loan repayment options:
Deferments And Forbearances: These options are for those who are unable to make their monthly payments.
Loan Consolidation: If you have multiple loans and want to bundle all of them together under one single payment and on lower monthly interest, try loan consolidation then. Before choosing a school loan repayment plan from any lender, try to read out the terms and conditions as well as frequently asked questions for important details. |
