Our student loan counselors evaluate each individual’s debt and help him or her craft the best repayment plan for them. Depending on your situation, you could have a wide variety of repayment options:
Alternative Repayment Plans
Whatever kind of loan you have, it will have unique repayment terms. From there, there will be multiple options, including:
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Standard Repayment Plans
This is where you make a fixed monthly payment for 10 years, and the payment can get as high as $50. This is a popular option, and will get you out of debt the quickest
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Graduated Repayment
This involves lower payments at first, then gradually get larger over the life of the loan.
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Extended Repayment Plans
These can take up to 30 years to repay. These plans help those with loans larger than $30,000.
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Income-Based Repayment
This sets your monthly payments based on your ability to repay. You should always be able to afford the monthly payment, since it’s based off of your family size and income. You’ll have to qualify to be eligible for IBR. After 25 years of payments, any remaining debt is forgiven.
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Public Service Loan Forgiveness
These plans are like IBR, but they have even better terms. If you work in public service, you can have your remaining debts forgiven after 10 years of regular payments on this plan.
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Pay As You Earn
These plans are another option like IBR, where you have to qualify (by demonstrating a partial financial hardship). You will pay for 20 years (or 10, if you work in public service) and then your remaining debts are forgiven.
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Income-Contingent Payment Plans
These are an option for those who don’t qualify for IBR or Pay as Your Earn. Payments are due for 25 years, with amounts set based on your income, family size, and debt.
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Income-Sensitive Plans
There’s also a short-term Income-Sensitive plan for those who can’t get an income-contingent plan. This can last up to 10 years, but you’ll be expected to transition to a different repayment plan at that time.
Deferment
- This is a period when your loan repayment is delayed. Your loan will continue to accrue interest during this time. A student loan counselor can tell you if your loans qualify for deferment and whether your situation warrants it.
Forbearance
- If you don’t qualify for a deferment, forbearance can allow you to stop or reduce your monthly payments for a short time. You’ll still accrue interest like on the deferment. A discretionary forbearance is for when you face a financial hardship or illness. A mandatory forbearance means you lender has to agree, but you must fit specific criteria (like loan forgiveness for teachers, or military-related circumstances)
Loan Consolidation
- A direct consolidation loan can combine all of your federal student loans into a single debt. This can make your payments more convenient, but it will change the terms of your loan, so you definitely want to talk to a student loan counselor before pursuing a consolidation to make sure it’s a good idea for you. It’s not a good idea to consolidate federal loans into a private loan, so make sure you understand exactly what you’re getting in a consolidation loan.
Forgiveness
- There is a lot of confusion about student loan forgiveness. No one is going to let you simply walk away from your debt without having to make payments. At best, student loan forgiveness will be partial relief for some borrowers.
- Some of the options listed above under Alternative Repayment Plans offer forms of loan forgiveness, but any debt that is forgiven is waived at the end of a long period of regular monthly payments. In these situations, one must have 10, 20, 25 or even 30 years of regular monthly payments to see any loan forgiveness. If you default on your loans in the meantime, you lose these options.
- Politicians talk about loan forgiveness, and that has led many to stop paying their loans in the expectation of some kind of governmental debt relief. This is a huge mistake. Even the most generous forgiveness plans being discussed involve only forgiving the interest on debt, not the principal. Keep making your payments in the short term and don’t expect much relief from Washington D.C.
- Whatever the option, debt forgiveness comes at the end of the process, not the beginning. Talk to a student loan counselor about how to be on the right path to getting the maximum amount of loan forgiveness eventually.
- If your school closes or committed fraud when selling you a degree, your debt may be discharged. You can also have your debt fully discharged due to total disability or death.
Student loan repayment options are many, and can get complex. Talk to a student loan counselor to make sense of your total situation before choosing any particular path.
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Springboard helps individuals with student loan debt find the right repayment solution. Our advisors will evaluate each person’s situation and walk them though the process step-by-step. No obligation, just trustworthy and impartial advice.
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