Student Loan Repayment Schedule
Borrowing to pay for college seems to have become the norm in America. The Huffington Post reports that more than 40 million Americans are facing student loan debt. Repaying students loans is now one of the many realities of attending college. Fortunately, there are different loan repayment plans available based on the type of loan borrowed.
Student Loan Recap
With the increasing cost of college tuition comes an increasing need for students and their families to seek federal and private loans. To recap, students will most likely to borrow the following types of loans for college:
- Federal Direct Loans (including Stafford and PLUS loans)
- Perkins Loan
- Institutional loans, which the college lends
- Private student loans
Direct or Stafford Loan Repayment
Stafford loans are subdivided into two categories, subsidized and unsubsidized. “Subsidized” means the federal government will pay the interest that accrues on the principal balance while the student is in college or in any type of authorized deferment. “Unsubsidized” means the borrower is responsible for any interest that accrues. Repayment terms are similar for both types of Stafford loans. Repayment usually begins 6 months after graduation, and lasts 10 years, but can be longer depending on the type of repayment plan selected. It is important to note that selecting a longer repayment term will result in paying more money over the life of loan.
PLUS Loan Repayment
These loans are available to the parents or legal guardians of students. Repayment usually begins as soon as the loan is disbursed, but under some circumstances, payment may be postponed until after the student graduates. Borrowers typically have up to 10 years to repay. However, there are payment plans available that may extend the repayment period. Deferment or forbearance options may be available to borrowers who meet certain criteria.
Perkins Loan Repayment
A Perkins Loan may be offered to students in the case of exceptional financial need. Repayment usually commences 9 months after graduation, and borrowers usually have up to 10 years to repay. For information on repayment terms or deferring a Perkins Loan, it is advisable to contact your school.
At their discretion, schools may make loans available to students as part of their aid package. For details on repaying these loans, contact your school directly. As these loans are not federally backed, they are often similar to private loans and carry higher interest rates than federal loans.
Numerous banks offer private loans. The following banks are among the most popular lenders:
- Citizens Bank
- Sallie Mae
- Wells Fargo
These banks offer a variety of interest rates on different loan products, and they provide different payment plans and repayment periods. Some repayment plans require a fixed monthly amount while others are graduated so that you pay more as you earn more throughout your career. It is advisable to review your student loans terms, opt for the most favorable repayment plan based on your particular circumstances, and, if you are having trouble repaying your private loans, work directly with your lender towards a solution.
Calculating Student Loan Repayment Amounts
All lenders will let you know the monthly amount due, but you may still want to estimate a calculation of your repayments. The U.S. Department of Education provides a student loan repayment estimator which you can use to help you estimate your monthly repayment amount.