After you graduate college, you typically have a six month grace period before you have to start paying back your student loans. Before you have to start making payments, you should consider the repayment options available to you. If your loan is already in repayment and you're having trouble making payments, you might be able to lower your payments by changing your payment plan.
These are some of the most commonly available student loan repayment options. Check with your lender for additional options and to change your repayment plan.
Standard/Level RepaymentUnder a standard/Level repayment plan, your payments would be relatively the same throughout the life of the loan. If your loan has a variable interest rate, your payments may rise and fall slightly based on interest rate changes.
Graduated RepaymentA graduated repayment plan allows you to make lower payments in the early years of the loan. Your payments will increase over the life of the loan. Many graduated repayment plans allow you to make interest-only payments in the first 2-4 years of the loan. Other plans increase your payments by a certain amount every few years. The repayment period is the same as if you were paying on the standard/level repayment plan.
Extended RepaymentExtended repayment plans lengthen your repayment period resulting in lower monthly payments. Payments remain the same throughout the life of the loan. You will end up paying more interest on the loan under an extended repayment plan.
Income Contingent RepaymentIncome contingent repayment plans base payments on your income. If your income is low, your payments will also be low based on your income. On the other hand, if your income is high, your payments will be higher.
ForbearanceForbearance allows you to reduce your payment amount, stop making payments temporarily, or extend your repayment period. The lender might ask you to provide documentation supporting your reason for making the forbearance application. You are responsible for making interest payments while your loan is in forbearance. Any unpaid interest will be usually be capitalized (added to your total balance) at the end of the forbearance period.
DefermentDeferment allows you to postpone your payments for a period of time under certain circumstances. You can defer most student loans under the following conditions:
- You are enrolled in school at least half time
- You are actively seeking, but not able to find, employment
- You have economic hardship