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October 3, 2014

Student Loan Consolidation Repayment Plans Available For Your Federal Direct Loans

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Here are 4 student loan consolidation repayment plans that are available to you for your federal direct student loans.
Consolidating your student loans lowers your monthly payments so they fit your budget. You can choose the option from these 4 that best suits your situation so that your student loan repayment doesn’t become a serious financial burden.
The equal payment option allows you to consolidate your federal direct student loans using equal monthly payments. You receive a fixed interest rate on your loan and then make equal payments until your loan is paid off. The main benefit to you is this is the least expensive option since you pay both interest and principal. The consistency of this option helps – you know how much you pay each month and it won’t change.
If you anticipate needing lower monthly payments for the first couple of years, then a graduated repayment plan may be right for you. You begin by paying lower monthly payments (usually interest only). After a specified period of time (usually 2 to 5 years), your monthly payments are increased to include both interest and principal.
This option is more expensive than the equal payment method because the initial period only covers interest so it takes longer for you to pay off the principal. As a result, you get charged interest for a longer period of time.
If you have an equal payment or graduated repayment plan, you can extend your repayment to 15 years if you qualify. In order to qualify, you need to have an FFEL loan that was disbursed on or after October 7, 1998 and the total amount of FFEL debt you have must be greater than $30,000. By extending your loan repayment, you lower your monthly payments so they can better fit your financial situation.
You need to keep in mind that by extending your repayment, it becomes a more expensive option since you get charged interest for a longer period of time.
If your financial situation just can’t handle the repayment requirements of these options, then another of the student loan consolidation repayment plans is called income sensitive repayment. Your monthly payments are adjusted each year based on your gross annual income. It takes into account your total debts and the size of your family. Your lender requires documentation about your income and debts in order to properly assess your monthly payment level.
No matter what your financial situation is, there is an option for you. These 4 student loan consolidation repayment plans provide you with a wide range of options so you can repay your student loans and have those monthly payments fit your budget.

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