Students: Here’s How Long it will take to repay those loans

September 13th, 2021 by

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Depending on what type of student loan you took out when you started school will dictate what the repayment plans will be when you graduate, the Consumer Financial Protection Bureau says.  

These repayment plans often come with how long you will have to pay off your loan. It is advised that you call your loan servicer to talk about the repayment plans available to you based on whether you have a federal or private student loan.

Federal Student Loans

For those who have Federal student loans, there are several repayment plans available to you.  It is advised that you call your servicer to discuss repayment plans and learn how to apply and enroll in a different repayment plan. Here are some of the most common types of repayment options available for those who have a federal student loan.

Standard Repayment

Most federal loans borrowers are eligible for this repayment plan.  Your payments are a fixed amount over the life of the loan (typically 120 months (10 years)).

Graduated Repayment

All federal loan borrowers are eligible for this repayment plan. This plan will benefit those who expect their income to rise over time. Payments start off low and increase every two years. You will pay more interest over time than under the standard repayment plan. You can expect to take 10 years or 120 months of repayments. If you have a consolidation loan you can take up to 30 years to pay it off as well.

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Extended Repayment

If you borrowed more than $30,000 in federal student loans, this plan is available to you. You have up to 25 years to pay back the amount borrowed. You can extend the term of your loan; however, you will pay substantially more interest over time. The upside to extending your terms out is through you will pay more, your monthly payments will be significantly smaller.

Income-Driven Repayment Plans

Some of these plans include Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), Income Contingent Repayment (ICR) These income-driven plans take a certain percentage of your discretionary income as the amount you pay back on your loan. This amount can change as your income and family size change. You do have to submit information on your income and family size each year to stay enrolled or maintain a monthly payment that fits in your financial plan. One option that makes these types of repayment plans different is that you may be eligible for loan forgiveness after 20 or 25 years of qualifying payments and in some cases as few as 10 years if you work in public service.

Private Student Loans

There are no standard repayment programs for private student loans. Many private loans have 10 years (120 months) to repay. There are some plans that can take up to 25 years to pay off as well. You should contact your loan server to see what type of loan repayment plans your private student loan provider has.

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If you are unable to make full payments some lenders do have other types of repayment plans as well such as a Graduated repayment plan where your payments start out low and gradually increase over time. Much like the federal student loan program. Also, there may be a plan where you pay less each month but extend the life of your loan over a longer period of time. This is referred to as an extended repayment.

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