Student Loan Repayments: Why Get Confused?

by : Joel Cohen

Once graduated and grace period starts you should begin searching for a job. If you have obtained student loans during your college studies, grace period will be the best time for you to choose a Student Loan Repayment Plan that will fit your needs. It is important not to panic about paying back the debt you owe. Panicking leads to confusion and confusion won't help you at all. By using a trustable student loan payment calculator you will be able to find the best repayment plan available to work with.

The Type of Student Loan Repayment Options Available

Federal student loans carry different loan repayment laws than private student loans. However, similarity exists between the 2 types of loans. For example, in both cases, loan repayment begins 6 - 9 months after graduation. The student loan repayment plans available are designed to help students repay their loans in the most flexible way possible, on a case to case basis. Amongst the most popular types of loan are the following:

  • Level / Standard Repayment Plan

  • Graduated Repayment Plan

  • Income Sensitive Repayment Plan

  • Extended Repayment Plan

  • Choosing a Student Loan Repayment Plan

    As understood you should choose a repayment plan based on your financial capabilities.

    The Standard repayment plan is the default plan you get. It allows the student to pay back the loan over a 10 year period. Monthly payments don't change during the repayment period.

    A Graduated repayment plan will allow you to pay a fixed, smaller amount monthly during the first few years. With time the amount will grow. This repayment plan will be found suitable for people expecting a fixed income.

    Choosing an Income Sensitive Repayment Plan is in fact like choosing a Graduated repayment plan except for 1 difference. You will be paying a certain percentage from your income.

    Extended repayment plans allow you to pay off your debt in small amounts over a period of 25 - 30 years. This repayment plans carries the highest interest rates.

    I Have a Few Student Loans to Pay Back, Which Repayment Plan Should I Work With?

    Consolidating student loan debts is wise for any student that has obtained more than 1 student loan and owes more than $7,500 in total. Student loan consolidation programs help you reduce the interest you are supposed to pay and help you get a fixed rate. If you have obtained private loans for students labeled as bad credit, once you consolidate all your loans your credit ratings will improve instantly.

    It is always clever to compare a few offers from at least 3 different lenders before consolidating loans or applying for one.

    As you understand there are many different student loans repayment options available, be sure to do research before applying for a program.