How to Choose the Best Student Loan Repayment Plan

More than 43 million individuals across the United States have federal student loans. While qualifying for a loan isn’t difficult, repaying student loans in full is a task that seems nearly impossible to many. There are eight different repayment plans for federal student loan borrowers including:

  • Standard Repayment Plan
  • Graduated Repayment Plan
  • Extended Repayment Plan
  • Revised Pay As You Earn Repayment Plan (REPAYE)
  • Pay As You Earn Repayment Plan (PAYE)
  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Income-Sensitive Repayment Plan

If you are graduating from college soon or are struggling to repay your student loans, it is important to know your options for repayment so you can make an educated decision for your financial future.

Know How Much You Can Afford When Taking Out a Student Loan

The first step in knowing which student loan repayment plan to choose is knowing how much you can afford to pay. When figuring out how much of a student loan payment you can afford, it is important to take into account your monthly expenses such as your mortgage or rent, utilities, groceries, and other debts.

The most traditional form of repayment is the standard repayment plan, which often requires a higher payment than other plans. If you are able to afford the payments on a standard repayment plan you will pay far less in interest over the life of your loan than with other options.

Understand the Qualification Terms for Student Loan Repayment Plans

There are some repayment plans you can choose because you prefer them and others that you must qualify for. Repayment plans that you DO NOT have to qualify for include:

  • Standard Repayment Plan
  • Graduated Repayment Plan
  • Extended Repayment Plan

Repayment plans that you MUST qualify for include:

  • Pay As You Earn Repayment Plan (PAYE)
  • Revised Pay As You Earn Repayment Plan (REPAYE)
  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Income-Sensitive Repayment Plan

It is important to understand that if you agree to a repayment plan, such as the Pay As You Earn plan or the Income-Based Repayment Plan, you must submit information to prove you qualify on a regular basis. If you are unable to prove your income or your income no longer qualifies, you will be forced into a different plan.

Know How Long You Want to Be Repaying Your Student Loans

Although a smaller monthly payment might seem attractive at first, you need to know that smaller monthly payments often mean longer term lengths. The Standard Repayment Plan is set up so you can repay your loan in ten years. Other payments such as the Extended Repayment Plan require payments for as long as 25 years. If you do not want to be managing student loan debt payments well into your 50s or 60s, finding a way to swing a larger monthly payment might be worth it.

Some borrowers in certain industries qualify for student loan forgiveness. If a borrower qualifies for forgiveness, they are able to stop making their payments once they qualify no matter which repayment plan they are on.

Competent Legal Representation for Student Loan Debt Settlement

No college student imagines suffocating under the weight of student loan debt. Sometimes, despite choosing the payment plan that is best for you, you can still need help. If you’re struggling to make your student loan payments, it’s in your best interest to contact a trusted debt settlement attorney as quickly as possible. A debt settlement attorney is experienced in negotiation and will work in your favor to reduce and eliminate the balance you owe on your student loans.

The attorneys at McCarthy Law PLC are a trusted source of legal representation when it comes to student loan debt settlement. Under our debt settlement program you will only have to pay a fraction of the cost of what you owe on your student loans. If you’re unable to settle your student loans, you might be eligible for refinancing or loan consolidation. To schedule a consultation with a knowledgeable and experienced debt settlement attorney, call our office at 855-976-5777 or fill out an online contact form today.

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Michael Adams

Michael Adams

Michael Adams focuses his practice in debt litigation and consumer protection. Michael regularly assist clients through the debt settlement process as well as ensuring their rights as consumers are protected. Michael is an Arizona native who received his undergraduate degree from the University of Arizona and his law degree from Arizona Summit Law School where he excelled academically.