Student Loan Repayment Options: Find the Best Plan For You
As a recent college graduate, you’re probably wondering what kind of repayment options are available to you. There are so many different repayment options out there and it can be overwhelming! There are several good reasons for this: first, repayment options differ depending on your lender and the amount you owe.
Depending on your loan terms and amounts, you might be able to qualify for different repayment options. In general, lenders will allow borrowers to make partial payments on their obligations based on certain conditions. If these conditions aren’t met, the lender won’t consider the loan as eligible for repaying part of it. Let’s explore some of the most common option types and what implications they have if you choose them wisely.
Repayment Type 1: Conventional Debt Repayment
Some lenders will allow you to make partial payments on your debts based on a “cost of loan” rather than the total amount owed. This is often referred to as a “conventional debt” repayment option. Conventional debt repayments often fall under the category of “conventional loan” repayments. Other special types of debt, such as credit card debt repayment, may require a more in-depth analysis to determine if they are “conventional” debts.
Repayment Type 2: Income-Based Repayment
Some lenders will allow you to make partial payments on your obligations based on some portion of your income. This is referred to as a “income-based repayment” option. Income-based repayment options fall under the category of “income-related” debt repayment. Other repayment options, such as loan-repayment programs, may require more in-depth analysis to determine if they are “income-related” debts.
Repayment Type 3: Private Loans
Private loans are loans you make yourself. Some private loan providers may also allow you to make partial payments on your debts based on certain terms and conditions. These terms and conditions may vary depending on the loan’s purpose, but they usually include what percentage of the loan is paid back at the end of each month. Some private loan providers may also require you to make a minimum monthly payment, known as a “back-payment,” before the loan is granted.
Subsidized Loans
Some loans will be approved for sub-prime loans, which are lower-interest loans with higher down-payment terms and fewer monthly payments. These loans often have higher interest rates and may require you to make a higher down payment or pay more in upfront costs. To qualify for a sub-prime loan, you must have an income above the approved income level and have a bad credit history. Some lenders may also require you to pay upfront for a small portion of your down-payment.
Unsubsidized Loans
Some loans will be approved for a higher than average interest rate, known as an “unsubdetermined” rate. These rates may be lower than the “subsidized” loans mentioned above, but are still higher than the “unsubdetermined” rates. These rates also depend on your credit score and the creditworthiness of the lender. Some of these rates are also known as “qualifying factors.”
Bottom Line
If you’re debt-ridden and looking for a way out, there are several repayment options available. The first is conventional debt repayments, which are approved for low-income people and families. The second is income-based repayment, which is only available to people with high income levels. The third is private loan repayment, which is only available to people with good credit. The last option is a “subsidized” loan, which means it will only help if you have a low income. If you choose any of these repayment options, be sure to talk to a financial advisor first to make sure they’re right for you. Before making any major financial decisions, make sure you understand the repayment options and what implications those have if you choose them wisely.
