There are 7 million borrowers currently in default on student loans, and over a trillion dollars in outstanding balances. Many people have trouble meeting their repayment obligation, but there are options available for struggling borrowers, including a variety of repayment plans. If you’re having trouble paying your student loans, talk to your lender and consider the following options for repayment. For further help and possible debt relief, call a Cleveland student loan lawyer from Luftman, Heck and Associates today.
Student Loan Repayment Options
- Standard Repayment – This option is usually the most cost effective for anyone who can afford it. It is the fastest way to pay off your loans, and therefore accumulates the least amount of interest over time. Standard repayment plans allow you 10 years to pay off your federal loans, and can be extended for up to 30 years through a federal consolidation loan. Borrowers are automatically enrolled in this payment plan when their loan becomes due. You do not need to take any additional steps to apply for standard repayment.
- Graduated Repayment – This repayment schedule is a good option for borrowers who are struggling soon after graduation. It allows you to make smaller monthly payments right now and larger payments in the future, presumably once you have secured a better income and can afford higher payments. You have 10 years to pay off your loans under this plan, 30 years if you secure a consolidation loan.
- Extended Fixed Repayment – This is an option for borrowers who have more than $30,000 outstanding in federal direct loan program loans, or federal family education loan program loans. It extends the maximum repayment term to up to 25 years, lowering the amount you pay every month. This can be a viable option for struggling borrowers, but remember the longer it takes you to pay the more expensive your loans are as interest continues to pile up.
- Extended Graduated Repayment – This option is for borrowers similarly situated as those pursuing an extended fixed repayment plan. The graduated option, however, allows you to make smaller payments now and bigger payments in the future when you hopefully have secured a more reliable income that allows you to afford higher monthly payments.
- Income Sensitive Repayment – This repayment schedule is for borrowers who are really struggling and need flexible payments that are tailored to their income. This option allows you to pay based on your monthly gross income, monthly payments must be enough to cover accruing interest and borrowers must reapply annually to continue to qualify for this repayment plan.
There are also a number of recently expanded income based repayment options. Including the following.
Expanded Income-Based Repayment Options
- Pay As You Earn – Under this plan, your monthly payment will be calculated based on your adjusted gross income and family size. After 20 years of qualifying payments, your remaining balance will be forgiven.
- Income-Based Repayment – This plan is for borrowers who are really struggling and need flexibility. Monthly payments will be calculated based on your gross income, family size, and the state where you reside. Your payment will be recalculated annually to account for any changes in your living situation and financial circumstances, and may be less than the interest that accrues each month. These plans do offer loan forgiveness after a set amount of years of qualifying timely payments.
- Income Contingent Repayment – Another option for borrowers in trouble, this plan allows you to calculate your monthly payment based on your income, family size, and the balance of your eligible loan debt. After 25 years of qualifying payments on this plan, the rest of your loan balance will be forgiven.
If you’re having trouble keeping up with multiple loans, payment schedules, and interest rates, certain repayment plans may be the better options for you. Contact a student loan attorney from Luftman, Heck and Associates at to find out more about your options, and remember, defaulting should never be an option.