What is the smartest way to get my Student Loan repaid?

When you apply for a student loan, whether it be a federal loan or from a financial institution, you usually have to pay off your loan when either you graduate or you fall below half time enrollment in your college education. Half time enrollment is defined at six credit hours a semester, once you fall below that it will be time to start paying your student loan. There are a few different options you can take when you start to repay your student loans. As always the options vary based on whom your lender is, but these seem to be the most common.

Standard Repayment Plan

The standard repayment plan is just what it name makes it out to be, standard. You will have a fixed monthly payment with your lender and you will usually pay off your loan within ten years. With a standard repayment plan your monthly payment will be more then it would be under the other plans. This is due to the fact that you will pay off your loan relatively quickly, within ten years. This can be beneficial to you because you will be acquiring a lot more debts over the course of your life. It would be nice to have your student debt out of the way before you are deep other payments, like a mortgage or another student loan.

Extended Repayment Plan

Maybe you can’t afford to pay such a high monthly cost to repay your loans, or maybe you don’t want the pressure of paying off your loan in ten years. The extended repayment plan can extend your loan length to up to 30 years. It will then work like a credit card payment, you will have a minimum balance each month and you will choose how much to pay. If you pay the minimum each month it will probably take you 30 years to repay the loan. There is no pressure and you can go at your own, leisurely pace.

Graduated Repayment Plan

The graduated repayment plan is a nifty little plan that allows you to pay off your loan in a creative way. Your monthly payments will start out low but then increase every couple of years. This is a good plan if you expect your income to be increasing over the years. You can start out paying low when your income is going to be low and by the time the monthly payments get really high, your income will be higher and allow you to compensate for such high payments.

Income Repayment Plan

Under this plan your monthly payment will be adjusted by how much income you are currently receiving. Each year your monthly payments will be recalculated based on how much income you received that year. This can be a good plan to insure that your monthly payments will never become too much for you to handle. It can lead to problems, however, if your income adjustment falls below the minimum monthly payment you owe.

Find out more about student loans at Ed.gov
Find out more about repaying student loans.