Which Student Loan Repayment Plan Will be the Best Option for Me?

by Luke Homen

Which student loan repayment plan will be the best option depends on your circumstances, priorities, and what you can afford to pay. In this blog, we’ll discuss your choices, how they work, and whether they’re good for you. Student loan Convenient Bankruptcy attorneys can help you improve your situation if your repayment plans don’t work out.

Convenient Bankruptcy attorneys Luke Homen, Alex Sullivan, and Colin Barrett are Oklahoma student loan attorneys who help clients manage their student loan debts, including seeking a discharge. If you need assistance, call our law firm at 405-296-0079.

We help clients start new financial lives through bankruptcy protection, and our student loan lawyers aid clients through the student loan discharge process. We’ve helped many student loan borrowers like you free themselves from tens of thousands of dollars in debt.

You have options for making student loans, according to the Oklahoma Student Loan Authority. As time passes and your circumstances change, you may be able to switch from one plan to another that’s a better fit.

Standard Repayment

You pay the same amount every month for as many as ten years. The minimum is $50, but may increase depending on the amount you owe. This is the way to go if you can budget a level loan monthly payment. If you chose this plan you’ll pay off your loan faster, and pay less interest, than other plans with longer terms.

Graduated Repayment

Monthly payments are smaller at the start and increase every two years until you repay the loan. The maximum term is 10 years. This repayment plan may be a good choice for those who cannot afford the standard repayment in the beginning, but expect their income to significantly grow over time which will allow them to make higher payments. This could also be used for someone who wants to save money at the start (perhaps for a home down payment) and expects to earn more in the future. 

The downside to this approach is you’ll have problems over time if your income doesn’t increase as you expect or your costs are higher than you predict.

Income Sensitive Repayment

This payment plan changes yearly based on your monthly income and amount of student loan debt. This payment type can be used for up to five years. You can ask it be renewed every year. If it’s not, your payments will go to a level or graduated repayment plan when your Income Sensitive Repayment period ends. 

The interest you’ll pay over the loan’s term will be much higher because of the longer repayment term. Given these costs you should consider this option only if you can’t afford a standard or graduated repayments due to your low income.

Income-Based Repayment (IBR)

This income-based repayment plan is available for all Federal Family Education Loan Program (FFELP) loans, except PLUS loans (offered to parents of students and are part of the Federal Direct Student Loan Program) and consolidation loans which include PLUS loans. 

Under IBR, the monthly payment is based on the borrower’s income during any period the borrower suffers partial financial hardship. The longest repayment period may exceed 10 years. Eligible borrowers may qualify for cancellation of their outstanding loan balance.

Extended Repayment

After a borrower’s request, the lender may schedule standard or graduated installments for a period of not more than 25 years. This is available to borrowers whose first loan was received on or after July 1, 1993. It also applies to those with FFELP loans disbursed on or after October 7, 1998, and at least $30,000 in principal and interest is owed. 

Refinance

If you’ve repaid a substantial portion of your loan, you may be able to refinance (have a lower monthly payment) what remains due over the remaining repayment term.

Prepay Loans

You can prepay your federal student loans and get rid of your debt faster than following the standard plan. If you can increase the expected payment, it’ll be applied to the loan’s principal, and you’ll pay less interest.

You Can Trust the Oklahoma Student Loan Attorneys at Convenient Bankruptcy

Life is unpredictable. You may have planned a much better-paying career when you were in college, but it hasn’t worked out. There are many options for repaying your student loans, which come with costs and benefits.

The student loan law firm Convenient Bankruptcy team is also here to help you navigate your options and next steps when student loan repayment plans aren’t enough. Ready to discuss student loan discharge with our student loan lawyers? If so, call us at 405-296-0079 or send us a message online today.