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How Long To Pay Off Student Loans?

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University students apply for student loans due to increasing costs and having difficulty in managing their money. After graduation, these students face repayment of their credits. Many young graduates who do not know how long they have to pay off student loans, have difficulty in paying the loans they receive while studying at university and have to pay for decades. This prevents them from managing their money well in the future. And it may make it difficult to get the personal loans they need to get to achieve their financial goals. For these reasons, student loans should be paid as soon as possible. To do this, you must pay more than the monthly amounts in the repayment schedule set by the financial institution from which you receive student loans. Because these reimbursement plans are generally long-term and are made for long-term for ease of payment.

How long does it take to pay off student loans?

There are two types of student credits; federal and private student loans. And the time taken to pay off student loans varies depending on what type of student loan it is.

  • Federal student loans;

The period for paying federal student loans usually comes in three ways. These payment plans are as follows;

  • The standard repayment plan
  • Graduated repayment plans
  • Extended repayment plans.

The standard repayment plan;

According to this payment plan, students are usually given up to 10 years to pay for their loans. This period of time to pay the student loan varies according to several criteria. These criteria are; total amount borrowed, current interest rate, minimum payment amount of student loan.

Graduated repayment plans;

According to this payment plan, a period of up to 30 years is allowed to pay off student loans. This reimbursement plan gives you time to set up your financial foundation at the start of your career to make a refund. At the beginning, you start paying with the interest of all the credits you will pay. Your payments will then increase every few years. This is because they think that your income will increase, albeit slowly. This will shorten the time of your loan payments and this is good. Facilitates repayment of large student loans.

Extended repayment plans;

According to this payment plan, a period of up to 30 years is allowed to repay and completely eliminate student loans. However, the duration of the payment plan varies according to the amount of unpaid student loan. Accordingly, the period for pay off student loans amounting to $ 7,500 is 10 years; The amount of time to pay off student loans of US $ 60,000 or more increases up to 30 years.

In addition, income-based payments have been added to payment options in recent years. With this payment option, people have the opportunity to pay according to their income. Individuals pay their student loan debts by using a portion of their income (which is above a certain amount). This is voluntary. Income-driven repayment plans are divided into 4 groups in itself;

  • Income-contingent repayment (ICR) plans,
  • Income-based repayment (IBR) plans,
  • Pay-as-you-earn Repayment (PAYE) plans,
  • Revised pay–as-you-earn repayment (REPAYE) plans.

In these payment schemes, some will consider only your income to pay off student loans, while others will ask you to pay by taking into account your partner’s income. Some do not limit your payment if your income is high, while others limit your payments to the monthly amount you have to pay according to a 10-year plan.

According to income-contingent repayment (ICR) plans, the duration of student loans is 25 years. According to income-based repayment (IBR) plans, the standard of payment for student loans is 10 years, but for married people the payment period for student loans is different. The duration of student loans is 25 years. According to Pay-as-you-earn Repayment (PAYE) plans, a standard period of 10 years is given for pay off student loans, but for married ones the period of payment for student loans varies. The duration of student loans is 20 years. According to the revised share earn as-you-earn repayment (REPAYE) plans, the duration of student loans is 20 years for graduate students and 25 years for students’ credits for graduate students. Moreover, married people are obliged to pay according to the income of their spouses even if they have different tax files.

  • Private student loans;

According to this payment plan, a standard period of 10 years is given for pay off student loans. However, at the discretion of the lenders, a period of 5 to 25 years may be allowed to pay off student loans. The reason for this change is the consolidation of student loans. Student loans lenders give you the opportunity to pay longer when the student loans are consolidated. However, in such a payment type, the interest rate will be high.

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