Repaying Your Student Loans

Repaying Your Student Loans

Student Loans

For most loans, you’ll have six or nine months after you graduate, leave school, or drop below half-time enrollment before you must begin making payments. You can use this time to get financially settled, to determine your expected income and expenses, and to select a repayment plan. Once you enter repayment, you must make your payments on time to avoid default and default.

Grace Period

If you received a federal student loan, it requires you to complete exit counseling before you graduate, leave school (for any reason), or drop below half-time enrollment. Exit counseling is a mandatory information.session that explains your loan repayment responsibilities and when repayment begins. However, make sure you do your own outside research before entering any suggested repayment plan

Loan Information

Your Student Loan Borrowing History For each federal student loan you took, your school or loan servicer presented you with information about it, consisting of the amount you borrowed and the interest rate. It’s a great plan to run this information, to track your borrowing and to arrange for repayment of your loan. You still have the opportunity to see your federal student loan information Federal Student Aid website.

Sevicer

Make certain you have the name of the servicer for each of your loans and where to send your payments. The Department of Education uses various servicers to manage your loans. Many of the servicers are in current litigation for mishandling student loans and using unfair and deceptive practices. So make sure you do your own due diligence before agreeing to any loan balances, disbursements or interest rates. We would highly advise you to review your Master Promissory Note (MPN)

If your federal student loan payments are high compared to your income, you may want to repay your loans under an income-driven repayment plan. Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month. An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size.

Revised Pay As You Earn Repayment Plan (REPAYE)

Generally your payments will be 10 percent of your discretionary income, 20 years if all loans you’re repaying under the plan were received for undergraduate study, and 25 years if any loans you’re repaying under the plan were received for graduate or professional study

Pay As You Earn Repayment Plan (PAYE

Generally 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount.The repayment under this plan is 20 years

Income-Based Repayment Plan (IBR)

Generally 10 percent of your discretionary income if you’re a new borrower on or after July 1, 2014*, but never more than the 10-year Standard Repayment Plan amount Generally 15 percent of your discretionary income if you’re not a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount. How long will I be in repayment under each plan? 20 years if you’re a new borrower on or after July 1, 2014 25 years if you’re not a new borrower on or after July 1, 2014

Income-Contingent Repayment Plan (ICR)

Generally,your payment will be either 20 percent of your discretionary income or what you would normally pay on a repayment with a fixed amount over 12 years, adjusted according to your income. If you have Parent Plus loans this would be the only repayment plan you would qualify for based on your income.

Loan Forgiveness

Under all four plans, any remaining loan balance is forgiven if your federal student loans aren’t fully repaid at the end of the repayment period. For any income-driven repayment plan, periods of economic hardship deferment, periods of repayment under certain other repayment plans, and periods when your required payment is zero will count toward your total repayment period.