Even after retirement, university graduates believe that they will repay their student credits for many years. The amount of time it takes to pay off student loans varies depending on certain criteria. These criteria are ; amount borrowed, type of debt, payment plan chosen by the borrower, interest rate, postponement and usage rates of bans. The time it takes to pay off federal student loans typically ranges from 16 to 19 years.
Pay off federal student loans
The federal student loans are divided into 2 groups when reviewing the repayment plan; traditional repayment plan and income-driven repayment plan.
Traditional repayment plans are divided into 3 groups in itself;
- Standard repayment plans;
With repayment plan borrowers pay off student loans for 10 years. The exact monthly payment amount varies depending on the total loan amount, because the amount payable per month must be 1% of the loan balance at the time of repayment when pay off student loans.
- Graduated repayment plans;
According to this repayment plan, the time taken to pay federal loans depends on the amount of federal loans received. This period can be up to 30 years. Monthly payments start in proportion to interest payments and increase every 2 years.
- Extended repayment plans;
In the extended repayment plan, as in the graduated repayment plan, a period of up to 30 years is given depending on the amount of debt.
The extended repayment plan is also divided into two groups in itself;
- 2 conditions are required to qualify for a 25-year repayment; the borrower should not consodalite the federal student loan and the total federal loan debt must be at least $ 300,000.
- If the borrower has made a federal student loans consodalite, the period of pay off student loans varies depending on the loan balance.
Income-driven repayment plans are divided into 4 groups in itself;
Monthly payments are set to equal 20% of the borrower’s income. If he is married, he must file separately from his wife so that it is based solely on the borrower’s income. If there is a joint taxation file, her husband’s income is also included in the payment. After 300 payments, the remaining debt after 25 years is forgiven.
- Income-based repayment (IBR) plans;
Monthly payments can optionally be up to 15% of the borrower’s income. The standard payback period is 10 years, but the situation changes if the borrower is married. If he filed a separate filing, he only pays his debt based on his income. If the tax dossier is shared with the spouse, it also includes the spouse’s income, and pay off student loans are forgiven after 25 years.
Monthly payments are set to coincide with 10% of the borrower’s income, but 15% can be optionally taken. The standard payback period is 10 years, but the situation changes if the borrower is married. If he filed a separate filing, he only pays his debt based on his income. If the tax file is shared with the spouse, it also includes the income of the spouse and the debt is forgiven after 20 years ie after 240 payments.
Monthly payments are set to coincide with 10% of the borrower’s income, but 15% can be optionally taken. For undergraduate students, pay off student loans period is 240 years, ie 20 years; For graduate students the amnesty period is 25 years, ie paying 300. As income increases, the amount to be paid monthly increases without limit. In this form of payment, if the debtor is married, he / she pays the debt depending on the income of his / her spouse as well as his / her own income, regardless of the separate tax file.
Pay off private student loans
Repayment periods for private student loans differ according to the repayment period for federal student loans. Although the payback period is limited to 10 years as standard, in some cases it is 5 years or 25 years. Holders of these credits should review pay off student loans terms and speak to lenders to ensure repayment conditions.