Having a student loan is a big responsibility. For many college students, it's their only option for being able to afford a college degree. With this responsibility, many students don't know that they have have actual options when it comes to repayment options.
Here are some definitions of payment types: Standard or Traditional Repayment
This is the most common plan. The standard repayment plan means you will pay the same amount each month that you owe money. The only time this may change is if you have a flexible interest rate or if you are near the end of your repayment plan. In that case, the monthly rate becomes lower.
Graduate Repayment A graduated repayment plan is a convenient option that adjusts to your timing and your occupation. When you get out of college and even for a few years thereafter - repaying your loan can be difficult. Throwing an expensive student loan bill into the mix can be difficult. For some students it may be impossible.
This is why a graduated repayment plan may be the perfect option. You will be responsible to pay a lower amount each month at first, but as you become more established in your career, you will need to pay higher payments. This way, you don’t break your budget but may end up paying more in interest in the long run.
Extended Repayment
The extended repayment plan allows you to have low monthly payments for the duration of your loan. For many student loans, you can extend the repayment period to up to 25 years. This, of course, will cause you to owe more interest, but it can make for a more manageable monthly bill.
Additional plans include: Income Contingent Repayment and Income Sensitive Repayment. Explore these options if you're struggling and really need an alternative course of action.
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