· Your income: This is obviously the most important factor to consider because this is where your loan repayment will come from. The size of your income and the number of sources have to be taken into account. If you have a modest income, a long term repayment plan is better for you. However, long-term plans tend to have greater interest rates. You need to choose the right plan which will serve your interest.
· Your expenses: Closely tied to your income are your expenses. If, for example, you have a family to take care of, your living expenses are likely to be more than those of another person without any dependants. Your family size is also a factor to consider. The volume of your expenses determines how much you actually have to pay back your loan. You also have to decide which of your expenses can be put on hold and which ones cannot.
· Interest rate: The interest on your loan is an important factor. While a low-interest program would be the obvious choice, it has its own drawbacks, such as a shorter tenor and may place a greater burden on you. As mentioned above, long-term plans tend to have higher interest rates, barring other circumstances.
· Flexibility: Your income, living expenses and family size are likely not going to remain the same, so you need a plan that will adjust the amount you pay with time. You also need to find out if there are provisions for forbearance or deferment, just in case you need to take these options.
· Duration of repayment plan: No one likes to have a debt hanging on his neck for an interminable period of time, but choosing a short-term plan simply because you want to get it "over and done with" without a careful consideration of all factors involved could land you in trouble.
· Availability of debt forgiveness or cancellation: Some repayment plans have certain conditions under which your student loan debt may be forgiven or cancelled, but you might have to pay taxes on the amount forgiven or cancelled.
