Home Student Loans How To Repay Student Loans?

How To Repay Student Loans?

245
0

Many students need student loans when going to college or university. This is necessary to cover the costs of the school during the education period. Some students even try to finance school expenses using different methods because they cannot receive student loans. When this is the case, one of the first questions that comes to mind is undoubtedly how to repay student loans.

Student loans are divided into two; Federal student loans and private student loans. Therefore, the repayment of student loans also varies according to the type of loan. In fact, the payment methods of federal student loans vary according to the type of federal student loans. The repayment of special student loans is up to the discretion of the student loan issuer.

What is the process to repay student loans?

To repay student loans process varies according to student loan type. For this reason, students need to study separately according to their credit types.

  • Federal student loans;

Federal student loans are divided into three groups. Therefore, to repay student loans process varies according to 3 groups. These payment plans are as follows;

  • Standard repayment plans,
  • Graduated repayment plans,
  • Extended repayment plans.

Standard repayment plans;

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. There are some factors that determine the amount payable monthly. These factors are; total amount borrowed, current interest rate, minimum payment amount of student loan. According to this repayment plan, the payment process of student loans is 10 years as standard.

Graduated repayment plans;

This is the best way to repay student loans. This reimbursement plan gives you time to set up your financial foundation at the start of your career to make a refund and in this payment plan a period of up to 30 years is allowed to pay off student loans. Monthly payments start in proportion to interest payments and increase every 2 years. Because, the income you earn is thought to increase every year.

Extended repayment plans;

In this payment plan, a period of up to 30 years is allowed to repay and completely eliminate student loans. The extended repayment plan is also divided into two groups in itself;

  • If the borrower has made a federal student loans consodalite, the period of to repay student loans varies depending on the loan balance. To give an example according to this payment plan, someone who makes federal student loans consodalite the period for the pay off student loans is $ 7,500 is 10 years; The amount of student loans of US $ 60,000 or more increases up to 30 years.
  • 2 conditions are required to qualify for a 25-year repayment; the total federal loan debt must be at least $ 300,000 and the borrower should not consodalite the federal student loan.

In recent years, there are different options for paying federal student loans. These are called income-driven repayment plans and for to repay student loans are divided into 4;

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

The amount of payment, payment terms and payment terms of each reimbursement plan are different.

Income-contingent repayment (ICR) plans;

If you are married, you must have a separate tax file. Because if you have a joint tax file, you must include your partner’s income in the payment. After you pay 300, that is, after 25, your student loan debt is forgiven. With this payment option, you must pay 20% of your income as a monthly payment amount for the to repay student loans.

Income-based repayment (IBR) plans;

The standard payback period is 10 years, but this changes if you are married. If you have a different tax file from your partner, you can only pay according to your income. If you have a joint tax file with your partner, your partner’s income will also be included in the payment. With this payment option, you can optionally pay up to 15% of your monthly income for to repay student loans. Your student loan debt is forgiven after 25 years.

Pay-as-you-earn Repayment (PAYE) plans;

The standard payback period is 10 years, but this changes if you are married. If you have a different tax file from your partner, you can only pay according to your income. With this payment option, you can optionally pay up to 15% of your monthly income for to repay student loans. However, the standard payment amount is equal to 10% of your income.   If you have a joint tax file with your partner, your partner’s income will also be included in the payment. Your student loan debt is forgiven after 20 years.

Revised pay–as-you-earn repayment (REPAYE) plans;

If you have a spouse, even if you have a separate tax file, you and your spouse will be paid according to your income. If you are an undergraduate student, your student loan debts will be forgiven after 20 years and if you are a graduate student after 25 years. With this payment option, you can optionally pay up to 15% of your monthly income for to repay student loans. However, the standard payment amount is equal to 10% of your income.

  • Private student loans;

According to this student loan, the standard payment period is 10 years but it can be between 5 and 25 according to the request of the student loan issuer. To understand this, you must review the payment terms of the loan you have received and meet the payment terms by talking to the student lender. The reason for the change in terms of private student loans is the consolidation of student loans. However, when you consolidate, your payment interest increases with your payment period. With this payment option, the amount you need to provide for to repay student loans is also determined by the student loan issuer.

LEAVE A REPLY

Please enter your comment!
Please enter your name here