Student Loan Repayment Basics

Student borrowers who are entering repayment, or seeking information on repayment for the future, will likely encounter seemingly alarming statistics about student loan debt. According to the Center for American Progress, factors such as the recession of 2008 and state budget decreases in college funding played a significant part in the current student loan national debt, which presently amounts to over $1 trillion.

While no two borrowers are the same, many will feel like they are in the same boat, which is not surprising.

Although student loan repayment can seem like a daunting prospect, or current experience, one of the most effective keys to repayment success is being informed of options. In addition, it is always important for borrowers to have contact information for their loan servicers or lenders. For convenience, it’s worth it to program your loan servicer or lender information into your phone. Keeping organized will help keep you on track.

Repayment Plan Options

Private loan repayment plan options, and rules on deferment and forbearance, are not standardized. Borrowers should directly contact their lenders for information. As a rule of thumb, however, the federal government provides more flexible repayment plan options than private bank lenders.

When it comes to federal loans, the first critical step for borrowers is to know exactly which type of loans they have, as repayment options vary based on loan type. If you do not have this information, log on to My Federal Student Aid for account details.

According to Federal Student Aid, the following repayment plans are available for the Direct Loan and Federal Family Education Loan (FFEL) programs:

The main components of each plan center on how the monthly payment is calculated, the length of the repayment period, and which loans are eligible. In general, monthly payments are either based on a fixed formula or pegged to income earnings. Repayment terms range from 10 to 25 years. For specific information on each repayment plan, visit Federal Student Aid.

Borrowers can also consider a Direct Consolidation Loan, which can lower monthly payments but may prove more costly over the life of the loan.

Financial Aid

Perkins Loan Repayment

Perkins Loan repayment options are different from those available for the Direct Loan and FFEL Program. Perkins Loan borrowers should contact their school directly for information on repayment plans.

Public Service Loan Forgiveness Program

PSFLP is not a repayment plan. Students who meet the eligibility criteria, including making 120 payments under a qualifying repayment plan, can apply for forgiveness of the balance of their debt after completion of the repayment period.

SimpleTuition’s educational tools are dedicated to informing you of your options. The more you know, the better you can decide how to successfully and most conveniently pay off your student loan debt.


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