Finding the Repayment Plan meant for you
There are many options available for the method in which you repay your student loans. When it comes to repayment, time is not your friend. The longer the loan is outstanding, the more interest you will owe which will increase your total costs. Choosing the right plan depends on your financial situation and your desire to clear this debt.
The Standard Repayment schedule will pay off the loan in ten years. Monthly payments will be a minimum of $50 per month. The monthly payments will depend on the total money owed and can be quite high. Since you will meet your obligation in such a short window of time, you will accrue the least amount of interest.
The Income Based Repayment plan is based on your monthly payments on your income and family size. To be considered for IBR, the new payment must be below the Standard Repayment rate multiplied by ten years. After twenty-five years, the remaining balance may be forgiven by the lender if certain criteria are met. In addition, if a borrower with this pay scheme works in the public service field the loan could be forgiven in ten years.
Making the Payments Count
The best way to reduce the cost of a student loan is to borrow as little as possible. When you are in repayment status, try to pay as much as you can afford each month. The sooner you can pay off the loan, the less interest you will pay overall. If you can't pay more than the required amount, make sure that you pay on time to avoid penalties, late fees, and bad credit reports. By choosing the repayment plan that works best for you and managing it responsibly, you can eventually end your long-term relationship with your student loan.
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