Student Loan Repayment on easy terms

    Students have to borrow loans for their studies, and after completing their studies when they start their job, they have to repay the loans from their earnings. They can opt amongst eight available plans for repayment of federal student loans. Four of these plans are based on the income level of the student. The story of private student loans is entirely different because here the lending agency offers other flexible repayment options and moreover your existing student loan can be refinanced to avail a lower interest rate if you fulfill the required conditions. Hereunder we will describe the necessary information about student loan repayment plans.

    Selection of Best Federal Repayment Plans;Depending upon your income, job and family size you will have to select right federal student loan plan, few factors which help in your selection are cited below.

    1. First of all see if you are eligible for PSLF, that is public service loan forgiveness,and it is a program meant for govt. and nonprofit employees. If this is the condition, you can get your remaining loan balance forgiven tax-free after you make 120 qualifying loan payments. You should make most of those payments on a federal income-driven repayment plan to get the maximum benefit of PSLF;otherwise, you will have to pay the loan before you are eligible for forgiveness.
    2. If you are not eligible for PSLF, you should go for a standard plan, which is the default federal repayment plan. In this plan, you will have to repay the loan in equal monthly payments for ten years. This is the faster plan to repay your loan as compared to other projects,and you will have to pay less interest on your investments.
    3. If you can’t afford the standard plan, there are six more alternative repayment plans,and you may select any one from four income-driven plans and the graduated and extended repayment plans. There is the government’s repayment estimator to help you in your selection on the basis of your outstanding loan balance, interest rate, income,and family size.

    Income-Driven Repayment plan; In income-driven plans, the monthly repayment is fixed between 10 to 20 percent of income and the repayment period is set from 10 to 20 or 25 years. The remaining loan balance at the end of that term is forgiven, but you will have to pay income tax on that forgiven amount. As compared to standard plan monthly payment is less here,but total interest paid on your loan will be more.You can select the plan that is best suited to you from undernoted4 income-driven plans, on the basis of your income and family size. One more income sensitive plan is there,but it is available to low-income borrowers with federal family education loans.

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