There are multiple ways to pay for higher education. You can pay for it through scholarships, savings accounts, jobs, or student loans. However, a student loan is the most common way to pay for college. This way of financing your education leaves you with debt before you begin the career you hope to pursue with your degree.
Though financing your education through student loans can burden you, there are several ways to structure the loan payments to give you peace of mind and not break your budget. When structuring your loan payments, you must consider a few things.
Consider how much you can pay back, how you will pay it before, and a timeline. Here are the four most common payment plans to repay your student loans and get you out of debt.
Standard Reimbursement Plan
The standard reimbursement plan requires fixed payments of at least $ 50 per month for a fixed period. The loan payment term depends on the same amount, but it will not be more than ten years. This plan will probably allow you to pay your loan faster, and it will cost less if you have the money to make the payments.
Extended Reimbursement Plan
The extended reimbursement plan requires fixed payments for a fixed period like the standard reimbursement plan. However, the period can be more extended than the standard plan. Although you must pay at least $50 per month, the payments are usually much lower than you would pay using other plans. The lower payment is because the term to pay is much longer, from 10 to 25 years. Of course, this increases your total interest, but you can make payments easier to deal with.
Step-by-Step Reimbursement Plan
If you currently do not have a lot of income but expect a higher income, this may be the best plan for you. As with the extended plan, the payment term is 10 to 25 years, but there is an additional protection interval because your payments start lower. The minimum monthly payment is only $25 and increases every two years.
Withdrawal Plan Conditioned on Income
Your monthly payments will depend on your income, giving you some security if you do not have a certain income amount. What you pay each year increases or decreases based on what you earn, and no minimum payment is established.
With this plan, the payment term can be up to 25 years. After the deadline, the government will cancel or forgive any unpaid amount, although you must pay the income tax for the amount forgiven.
What can You do if You do Not Have The Money to Repay The Loan?
If you have problems paying your student loans, you can request deferment of your payments for a set period if you are in college, at least at half time; you request permission to be absent from work to be a parent; you enter a public service organization, such as the armed forces or the Peace Corps; Unemployment, a temporary disability or other events may also entitle you to request a deferment.
If your loans are deferred, your payment program stops, and the balance does not accrue interest. If you do not have a valid reason to obtain a deferment but cannot pay your loans, you can request a forbearance. If this request is granted, you will not have to make payments, but the loans will continue to accrue interest. In some cases, it is possible to get your loans forgiven or canceled.
This loan forgiveness usually requires extreme circumstances, such as total disability or other life-changing events. The government sometimes forgives loans as a reward for working full-time in specific positions linked to people with disabilities, low-income families, education, or other public service areas.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
