STUDENT LOAN REPAYMENTS PROGRAM
College education is not something which most students can afford without seeking the help of student loans which can be private or federal in nature. As all loans need to be repayed on time, student loans are no exception. The repayment in principal and interest starts after 6 months of graduation in a full fledged manner.
A student should set upon a specific loan repayment plan right from the very beginning so as to avoid any discrepancies when the loan is required to be paid.
There are a variety of repayment options available to the borrower from which he can chose the most feasible after an in depth conversation with his loan holder.
A List of Repayment Methods for Students
- The Standard Repayment method: This particular method of loan repayment is the most financially effective mode to pay off your student loan which at the very same time minimizes costs associated with interest to be paid. The schedule of payments is on a monthly basis, even if you don’t receive any notifications or statements regarding the same, besides the exception of deferment or forbearance. The standard repayment method has a repayment term of 10 whole years.
- The Graduated Repayment method: This method of loan repayment proves to be most feasible when at present your income is low but is expected to rise in the future, and thus it offers loan recipients with an opportunity to begin with low monthly payment initially. However, the interest costs are typically much higher over the year. The monthly payments besides starting off low and ending with a gradual high must be capable of covering the accrued interest. The repayment period for the graduated method is like the standard method of 10 years.
- The Extended Repayment method: Such plans are figure specific in nature. This repayment plan extends the time period for borrowers to repay their loans. Available only to those who owe a debt to the lenders of more than $30,000 in total, the repayment term for this plan can be upto 25 years. The major advantage of this plan is that the borrowers get to make a lower monthly payment.
- The Income Sensitive Repayment option: This method of repayment is strictly meant for FFELP loans. In this repayment plan, the monthly payment is largely determined by amount of money made by the loan recipient each month. People wishing to apply for this plan should produce a proof of income and other required information and are required to go through the same formalities if they want to enjoy the benefits of the same mode of repayment each year. This mode is only beneficial if you have a fluctuating income, need smaller monthly payments to meet other financial matters or you have substantial loan balances. However, the payments must cover the accruing interest and another fact to keep in consideration is that the total interest costs are substantially higher over the course of the loan and that the loan’s interest must be covered by monthly payments.
- The Income Contingent Repayment Mode: This repayment plan is only available for Direct Loans availed from the Department of education of the United States. Annual income, size of the family and the total amount of loans play a major factor in adjusting monthly payments.
- The Income Based Mode of Repayment: This repayment program simplifies the process of loan repayment for those borrowers who have a low salary. The loan repayment plan is adjusted according to the changes in the income and family size of the borrower. Also, a maximum repayment period of 25 years is fixed. Student loan debt forgiveness comes into action only after these 25 years.
Repayment Methods Explained
The Sallie Mae student loans provide all 6 of the above mentioned Federal student loan repayment option.
The Standard Repayment plan of the Sallie Mae student loans can be easily tested if it should work for a particular student or not by using the highly popular monthly loan payment calculators.
The Sallie Mae institution also offers private loans besides federal ones and obviously the loan repayment program of private loans would be very different from that of federal loans.
The loan repayment program of private loans varies by loan type, loan balance and the disbursement date. The Sallie Mae Smart Option Student Loan comprises of monthly payments of only interests during the periods of in-school and separation.
If under some unforeseen and unfortunate circumstances, a student is not able to cope with his repayment, he/she is under debt. Student loan debt forgiveness does not totally forgive students of the unpaid debt; this has to be paid in some form or the other by indulging in certain services.
Med students who were unable to pay off their debts can be provided with debt forgiveness if they agree to medically assist in the betterment of disaster-afflicted, economically backward or even war affected areas in the country itself. As no doctor would volunteer to provide such assistance, recruiters often offer such jobs to students in unpaid debt who will never be able to refuse to such an offer.
Other Ways of Paying off Student Loan Debt
Teaching is another way adopted by many students so that their debt is forgiven. They are mostly recruited in schools having a low income staff or in schools which are understaffed. Teaching handicapped children is also a common way adopted by many student borrowers to clean off their debt.
Resorting to military services or even Peace Corps is another alternative adopted by student borrowers trying to seek student loan debt forgiveness.
Neither of the modes mentioned above, be it medical assistance, teaching, military nor can Peace Corps lead to 100% loan forgiveness. Working for such institutions can help students reduce their loan repayment term. They can get a waiver of 15% in their first 2 years, another waiver of 20% in the third and fourth years and finally, a maximum of 30% waiver in their last and fifth year.
It has often been a serious matter of debate whether a student should indulge in these highly unfulfilling occupations just to complete his loan repayment; on the other hand, a student should seek such activities totally out of a willful desire for betterment of the society in order to repay their student loan debt.