by Repayable | May 23, 2018 | Getting started
Repayment flexibility is one of the biggest benefits of federal student loans. All that flexibility means there are a ton of student loan repayment plan options to choose from. You want to pick the smartest plan that helps you reach your student loan repayment goals but it can be confusing to choose.
Today’s post compares the federal repayment plans and lays the framework for decision-making. After you’ve read this you will be able to choose the right student loan repayment plan based on your specific financial circumstances and goals.
Estimated read time ~10 minutes.
A Breakdown of Repayment Plans
| Plan |
Qualifies for Loan Forgiveness |
Payments Based on Income |
Interest |
Maximum Duration of Repayment |
| Standard |
No |
No |
You will pay the least interest under this plan |
10 years
10-30 years if consolidation loan |
| Graduated |
No |
No, but payments increase over time to repay total over 10 years |
You will pay more interest than a 10 yr standard |
10 years
10-30 years if consolidation loan |
| Extended |
No |
No, but payments can increase over time to ensure total repaid in 25 years |
You will pay more interest than any plan with a shorter repayment term |
25 years |
| REPAYE |
Yes |
10% of discretionary income |
You will pay more interest than any plan with a shorter repayment term |
20 years until forgiveness if only undergraduate loans, 25 years if graduate loans |
| PAYE |
Yes |
10% of discretionary income but never more than 10 year standard |
You will pay more interest than any plan with a shorter repayment term |
20 years until forgiveness |
| IBR |
Yes |
10 or 15 % of discretionary income but never more than 10 year standard |
You will pay more interest than any plan with a shorter repayment term |
20 or 25 years until forgiveness depending on when you received your loans |
| ICR |
Yes |
20% of discretionary income or a 12 year standard payment adjusted for income, whichever is less |
You will pay more interest than any plan with a shorter repayment term |
25 years until forgiveness |
| Income Sensitive Repayment |
No, plan is only for FFEL loans which aren’t eligible for forgiveness |
Based on monthly income but will repay total in 15 years |
You will pay more interest than any plan with a shorter repayment term |
15 years |
Target Borrowers for Each Plan
Standard: Borrowers with low debt to income ratio are ideal candidates because the required monthly payments won’t eat up all the money needed for monthly cost of living.
Graduated: Borrowers who know their initial income will be low and that it will increase substantially with time.
Extended: Borrowers with > $30,000 in student loan debt and high debt to income ratios who aren’t looking for loan forgiveness.
REPAYE: Borrowers with a high debt to income ratio who are unable to afford payments under other plan types and would benefit from forgiveness of the loan balance after 20-25 years of making payments or those who are seeking PSLF.
PAYE: New borrowers on or after Oct 1st 2007 with a high debt to income ratio looking for loan forgiveness through PSLF or income-driven loan forgiveness after 20 years.
IBR: Borrowers seeking PSLF or income-driven loan forgiveness with a high debt to income ratio who are unable to afford payments under other plan types.
ICR: This plan is eligible for PSLF however the monthly payment is typically higher than other income-driven repayment plans, so this may not be the best choice for most borrowers. ICR is ideal for a a parent who consolidated a Parent PLUS loan into a Direct Consolidation Loan and is looking to obtain PSLF.
Income sensitive Repayment: A borrower with FFEL loans who is seeking more affordable payments than the 10 year standard plan.
Choosing the Right Student Loan Repayment Plan
Deciding if you’re in the right repayment plan is pretty straightforward once you apply a consistent decision-making framework to your own financial situation. You’ll want to use the information in the chart above and read about the target borrower for each plan type to make your decision.
Here are the questions to ask yourself:
- Are you considering loan forgiveness? If yes, Standard, Graduated, Extended, and Income Sensitive aren’t for you. ICR also isn’t for you unless you’re a parent with a Direct Consolidation Loan.
- How quickly are you trying to get out of debt? If you want to be out of debt quickly, want to minimize interest, and aren’t looking for loan forgiveness the 10 year standard plan is the best federal repayment plan. However, if you have high income and excellent credit you could consider refinancing your student loans. Read about refinancing here.
- Are you seeking maximum affordability of your monthly payment? If you’re considering loan forgiveness or are just looking to pay the least amount of money each month REPAYE, PAYE, and IBR are your best repayment plan options. You will pay the most interest under these plans. If you obtain income-driven loan forgiveness after 20-25 years you will have to pay taxes on the amount of student loan debt forgiven.
Your next steps.
Alright what do you think of your repayment plan? Are you in the right one or do you need to make a change? Next week’s post will be all about how to change your repayment plan if you’re not in the right one. In the meantime, do yo have questions? Hit me up in the DM’s of the Repayable Facebook Page, Insta or Twitter (@therepayable), or send me an email jeni@repayable.org I’m happy to help!
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by Repayable | May 14, 2018 | Getting started
You did it! You’ve graduated college and now you’re making a ton of life transitions. Maybe you’re moving to a new city, starting a new job, moving into a new place. There’s so much exciting change going on, and then there are your student loans. Ugh student loans. What are you going to do with your student loans? Where do you even start?
Today’s post is here to share four things you need to know about your student loans after you graduate. You’re smart, you just graduated college. After reading this and applying it to your student loans, you’ll easily know more than your fellow grads. Estimated read time ~5 minutes.
Figure out what type of student loans you have.
You’ll want to know if you have private student loans, federal student loans, or a mix of both. Federal student loans are loans funded by the U.S. government that have fixed interest rates and come with a standard set of borrower benefits. Private student loans are made by banks and other private lending institutions and often don’t carry the same benefits as federal loans.
One way to find out if you have federal or private loans is by looking at the name of your loans. William D. Ford Direct, FFEL, Stafford, PLUS, Perkins are all the names of Federal student loans. For more ways to find out if your student loan is federal or private you can read How to Figure Out if You Have Federal or Private Student Loans.
Figure out who owns your student loans.
To find out who owns your federal student loans you can log into the National Student Loan Data System (NSLDS) using your PIN. If you’re having trouble navigating this, your financial aid office at the college you just graduated from can help. You can send them an email to get started.
Find out how much student loan debt you owe.
If you want to take charge of your student loan debt you need to know exactly how much money you owe. When you log in to the NSLDS your federal loan amount will be listed. If you have private loans you will need to log in to your private loan servicers website to see your total loan amount, this also works for your federal loans.
For even more ways to find out how much you owe you can read How to Figure out How Much Student Loan Debt You Have
Find out which repayment plan you’re in.
Once you’ve figured out how much you owe and who you’re repaying your student loans through you’ll want to know how you’re set up to repay your student loan. There are many federal student loan repayment plans that could work for you. Next week we’ll talk about how you can decide if your repayment plan is the right one.
Next week we’ll start getting into what you can actually do with your student loan debt by deciding if your repayment plan is right for you. Cheers to starting your student loan repayment journey from a place of informed repayment rather than fear!
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by Repayable | May 7, 2018 | Getting started
Congratulations on the final countdown to your last set of finals ever!!! You’ve earned a celebration for all your academic achievements! Despite the celebration and pride that comes with graduating, you might have a little bit of nagging anxiety about when you need to start repaying your student loans.
Today’s post will talk about when your loans are “due”, which really means when you need to start making payments. No worries, that huge bill doesn’t come screeching in all at once 🙂 Estimated read time ~3 min.
Federal Student Loans
All your Federal student loans will now accrue (start adding on) interest, including your subsidized loans which didn’t add interest to your balance while you were actively enrolled in school. You will get a six month grace period where you don’t have to make any payments but interest will be adding up during that period.
Your first payment will be due: six months after graduation, unless you apply for a Direct Consolidation Loan, then your first payment will be due 60 days after the loan is disbursed (paid out).
Private Student Loans
Not all private student loans have a grace period so you may have to start making payments immediately. Some lenders offer a six month grace period. You’ll need to contact your private loan servicer to find out when your first student loan payment is due.
Your first payment will be due: zero to six months after graduation. You will need to check with your loan servicer to find out when your first payment is due.
Parent PLUS Loans
Parents are responsible for repaying Parent PLUS loans, the balance isn’t transferred to the child upon graduation. Generally parents are expected to start making payments on the Parent PLUS Loan once it’s fully disbursed (paid out). However, parents may request a deferment while their child is enrolled at least half-time and for an additional six months after their child graduates.
Your first payment will be due: For the parent, as soon as the loan is fully dispersed if deferment isn’t requested or six months after graduation if deferment is requested.
When will you be making your first student loan payment? Let me know in the comments below or on the Repayable Facebook page. If you have any questions or need help feel free to email me jeni@repayable.org on shoot me a DM on instagram @therepayable.
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by Repayable | Nov 6, 2017 | #Millenniallife, Getting started
Samuel Zeller
It can feel like the only way to get out of student loan debt is avoid anything fun and only pay down your student loan debt aggressively. Yet you want to live the life you imagined your college degree would earn you, a life without ramen noodles, clearance only clothes, and every night spent home. How do you live your life fully and repay your student loans while making the dollars add up?
Read on for strategies to repay your debt without missing out on everything.
Have a little fun
Repaying your student loans doesn’t have to mean spending all of your extra money on your debt. You can still have some fun, you just can’t have all the fun. If you love to travel maybe a large trip once per year and a smaller weekend getaway are enough to get you through repaying your debt. If you want to go out with friends, decide how often that fits in your budget.
Be conscientious and choose to spend on the fun activities that enrich your life so you don’t look back and feel like repaying your debt was a black hole sucking in all your joy.
Decide if you want stuff
Many people get happiness from experiences rather than things. Decide if you would rather have new stuff or save your money for something else. When you do need stuff try to plan your purchase so it meets your needs and you don’t end up having to buy something similar in a few months.
Instead of telling yourself you can never buy anything fun re-frame it as choosing not to buy stuff because you prefer to spend your money on travel, sky diving, football tickets, you name it.
Plan for your future
When you’re focusing on getting out of debt it can be easy to bankrupt your future self. You know, the one who wants to get married, or buy a home, or retire someday. Be sure to put away for some minimum requirements.
You need an emergency fund. How big of an emergency fund is up to you. You need at least one month of expenses at a minimum, although three months is better.
Contribute up to the max match in your employer-sponsored retirement plan if you can afford it. Don’t leave any of your employer’s money on the table, that is something you will miss out on because you won’t be able to get that match later.
If you have a big life goal like a wedding or a house to pay for decide how far into the future you’re willing to push that purchase. If you’re willing to wait until you’re out of debt then wait. If not, prioritize saving for this now.
You can’t have it all but you can have some…
What is it that you’re most afraid of missing out on? My priorities are getting my employer match, having a three month emergency fund, and traveling at least once a year. I don’t compromise spending in these areas to pay extra on my loans but I will compromise other types of spending such as buying stuff, going out to eat, or getting drinks.
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Weigh your desires against your debt
Think about how much happiness you’re going to get from paying for what you want and then think about how much happiness you get from making progress on your debt. If you don’t get that much satisfaction from repaying your debt think about how much worry having that debt brings you. Choose the option that maximizes your happiness.
Most of us are in student loan debt repayment for the long haul, anywhere from 2 to 25+ years. Think like you’re running a marathon, not a 5K. That means you need to develop a repayment strategy that considers your long term goals and that strategy will be different for everyone.
I want to know what you’re most worried about missing out on because of your student loans? Share your thoughts in the comments below or on the Repayable Facebook page. As always you can email me jeni@repayable.org with any questions, I’m here to help!
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by Repayable | Sep 4, 2017 | Getting started, Money Matters
Image By:Nelson Roth
The solar eclipse is far behind us and if you followed the rules you don’t have any lasting eye damage. Unfortunately following the rules in college doesn’t necessarily prevent you from having lasting financial damage in the form of student loan debt.
But never fear, Repayable is here to help you figure out the strategy that’s right for your financial situation so you can beat back your debt.
Read this if you’ve been too nervous to look at your student loan balance but you’re ready to try to do something about it. Estimated read time ~3 min.
If You’re in College and Have Federal Loans
The best way for you to see your total federal loan amount while you’re still in college is to go to the National Student Loan Data System (NSLDS). They’re your one stop shop for all your federal loan amounts. NSLDS collects their information from the Direct Loan program, schools, and the Department of Education. This information is a little older (about 120 days) so isn’t the best resource if you’re actively in repayment but works great while you’re still in college.
If You Have Private Loans or If You’ve Already Graduated
You can find out who your lender is by checking your credit report, your lender will be listed, or by asking your college’s financial aid office for help. Private loans aren’t listed in the NSLDS so this is the best place to find private loan balances. Your current loan servicer will have the most accurate and up-to-date information on your loan balance which is what you need if you’re in repayment.
So How’d it Go?
You looked at your balance, you stared right at it, you empowered yourself with a real number. So what’s the verdict? Is it more, less, or about the same amount you thought it was? I remember when I graduated I thought I had borrowed $118,000 then realized $10,000 of interest had accrued on my unsubsidized loans… it was such a bummer but very quickly helped me realize the financial burden of interest! Right now I owe $71,150.10. Share your experience with owning your number on the Repayable Facebook Page or in the comments below!
Additional Resources
NSLDS FAQ
How Much Do I Owe in Student Loans Article
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by Repayable | May 29, 2017 | Getting started
Start here if you’re just starting to figure out your student loans. It’s the road map for student loan debt. Follow the map and you will end up with a strategy for repayable student loans. Estimated read time ~10 minutes.
Find out how much student loan debt you have.
The very first step in finding a way to make your student loan debt repayable is to figure out exactly how much you owe. You may have a sense of how much you owe i.e. around $40,000. But the key to obtaining freedom from debt is to know your debt well, which means knowing the exact amount you owe. There’s a big difference between about $40,000 and $43,700.
You can find your total debt by logging in to the website of your loan servicer(s) and looking at your total loan amount. If you have multiple servicers, add the individual loan amounts together.
Start by reading the post How to Figure out How Much Student Loan Debt You Have.
Find out if you have federal or private student loans.
Federal and private loans may have different strategies for repayment so it’s important to know which type of loans you have.
The post How to Figure out if You Have Federal or Private Student Loans gives you a detailed how-to.
Determine when you have to start repaying your loans.
If you’re not already in repayment, you next step is to figure out when you’ll need to start repaying your loans. Federal loan repayment typically begins six months after graduation for Direct and Stafford loans but can differ for Perkins and Plus loans. Private loan repayment grace periods vary by lender so you’ll need to contact your private lender to figure out exactly when you’ll need to begin repayment.
Determine your repayment plan.
Your repayment plan dictates your financial approach to student loans. Be sure you’re in a plan that matches your desired approach to loan repayment. Read the posts How to Figure Out Your Repayment Plan for a step-by-step guide and Should You Break Up With Your Student Loan Repayment Plan? to get a sense of the key tenants of repayment plans so you can pick the best one.
Look at your interest rates.
When you go to your loan servicer’s website and look at your total loan amounts your interest rate for each loan should be listed next to the loan amount. Your interest rate helps you decide where to allocate extra payments (higher interest loans should generally be your first target all else equal).
Determine your financial state of affairs using debt:income ratio.
Are your student loans a financial nightmare? Are they really? The media will tell you yes, old school graduates will tell you it’s your own fault, so where is the truth? The truth lies in a simple mathematical tool called debt:income ratio. Find out how to calculate it (swear to god you only need basic arithmetic) and what it tells you by reading How Bad is Your Student Loan Debt? A Simple Answer.
Avoid Default
If things aren’t looking so rosy for you on the student loan debt front don’t worry, there are options. Check out Don’t Default on Student Loans: Do This Instead and Student Loan Repayment Panic? Let’s Talk About Deferment and Forbearance.
Decide your next steps.
After you gain an understanding of your student loans you may realize your best option isn’t just optimizing your repayment plan. If you think your best options is refinancing or loan forgiveness you can learn more about those topics by checking out the refinancing posts on the blog or loan forgiveness posts on the blog or by watching videos on the Repayable YouTube channel. The guides for refinancing and loan forgiveness are coming soon.
Additional Resources:
Federal Student Aid Understanding Repayment
Nerd Wallet Understanding Student Loans
Accessing your Student Loan Information Through NSLDS FAQ
A Description of Federal Loans
Federal vs Private Student Loans
Federal Student Aid Guide to Repaying Federal Loans
Federal Student Aid Overview of Income-driven Repayment
Federal Student Aid Overview of Repayment Plans
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