• The life of your loan and,
• The ratio of principal to interest in every payment
What student loan repayment options are there for you?
There are several and these include the following:
1. Standard payment - this plan has the highest monthly payments and his is because you only have ten years to pay. This is also the plan that allows you to pay less on your overall debt. If you have a variable interest rate, your monthly payment may fluctuate.
2. Extended payment - true to its name, this plan lets you extend from ten years up to 25 years. The extension of your repayment means you'll have lesser monthly payment dues however you'll end up paying more on your overall debt in terms of your interest.
3. Graduated payment - payments start low and gradually increases. This is helpful for borrowers who have entry level jobs or low starting pay but expect their income to increase in the coming years.
4. Income based payment - you have two choices in this payment plan depending on your loan type.
a. For FFEL loans - monthly payment is based on the expected monthly gross income
b. Direct loans - you can qualify for low payments to zero payments based on your income. As your income increases, so does your payments however payment requirements must not go beyond 20 percent above poverty level
For both student loan repayment options, the borrower is required to produce financial details to the lender that includes tax returns.
5. Perkins loan payment - a consistent minimum per month is established by the government which is: $30 for Perkins Loan or NDSL Loan taken before 1st o October 1992 and $40 after that date.
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