While Federal student loan payments are currently paused and temporarily set at 0% interest until the end of 2020, now is a great time to review repayment options and be proactive in setting your plan for making payments.
Several options make it easier to pay off Federal student loans and may be more suitable for your specific case. For example, some plans offer flexible payment schedules. Students applying for a Federal student loan can choose a graduated repayment plan that will allow them to start with lower payments after graduation that increase every two years. This schedule is good for those graduates who are likely to make more money in the workplace as they acquire experience.
Students also have the choice of several types of income-driven repayment plans, which are designed to lower monthly payments. The payments under such plans vary, but generally they are based on a percentage of the graduate’s discretionary income.
A third choice is an extended repayment plan that offers either fixed or graduated monthly payments and allows graduates to extend their loan payment schedules from the standard of 10 years to 25 years.
To save money over the long run, a graduate may opt for the standard repayment plan. It requires a loan to be paid in up to 10 years, but payments are of a fixed amount and interest on the loan is likely to be less under this plan than under some of the other plans.
Deferment or forbearance may also be a temporary option for graduates in a financial bind due to unemployment or other extreme hardship. In select situations, borrowers may qualify for other repayment alternatives through their loan servicers.
While this just provides a brief overview of student loan repayment options, it is important to understand that there are further detailed options that may be available to you and your specific situation, such as loan forgiveness or consolidation options. To learn the best way to repay your student loans, contact our office to have a discussion to create a tailored plan that is specific to your own individual goals and career outlook.
Simonet Financial Group, LLC
Phone: (512) 296-8962