Student Loans and Repayment Options


Federal student loans may have made it possible for you to attend college and given you a better opportunity to excel in the working world.  When it comes time to pay off those loans it’s just as important to understand your options.  Having the right financial plan in place to pay off your student loan and meet your other financial goals can make a big difference in your life.

The loan repayment options we’ll talk about today are income-based, graduated, extended, and standard repayments.

Income Based Repayment

The income-based repayment plan is a calculation that takes into consideration your income and family size.  If you meet certain requirements such as making timely payments, you may qualify for the 25-year cancellation or the 10-year public service loan forgiveness.  Both are incentives to reduce the burden if you follow the guidelines closely.

Graduated Repayment

Graduated repayments are designed to start off low and gradually increase to help you meet your payments. Depending on your loan structure, Stafford, Parent PLUS, Graduate PLUS, and Federal Consolidation loans can be as low as interest only.

Extended Repayment

Extended repayments can also help you reduce your payments and make them manageable.  Your payments will be lowered but you will have to make payments longer than the original plan.

Standard Repayment

The standard repayment will result in the least amount of interest paid in the loans discussed here.  While no one particular method is the correct choice for everyone, it’s important to understand and choose your options wisely.  Seeking financial advice may help you make the correct choice and help you reach your goals.

It’s important to note, that when choosing your repayment method to take into consideration your overall financial situation.  Choosing the option of lowest payment today can cost you a bit more down the road.  Speak with your financial advisor before making any decisions.

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