Is there more than one repayment program for Stafford Student loans?
Yes, there are several options available. The standard plan calls for principal and interest payments over up to 10 years. Of the options available, this has the lowest total interest cost.
Under a Graduated repayment, you start out with reduced payments that build during the maximum 10-year repayment term. Because you're reducing your loan balance more slowly in the early years, you'll pay more interest than in the standard plan.
You can make payments that are based on your gross income if you elect an income-sensitive plan. You'll have to reapply each year to use this plan, since payments will fluctuate with your income. This method also has a higher overall interest cost than the standard repayment plan.
If your student loan debt is large -- really large -- you may be able to use an extended repayment program, stretching your repayment over as long as 25 years, using either a standard or graduated payment plan. The longer term, of course, increases your overall interest cost.
You can also combine your eligible loans into a single monthly payment with a loan consolidation, with a fixed interest rate. That can lower your total monthly payments, but usually results in higher overall interest costs.
The nice part of the options available is that you don't have to select which one you'll use until it's time to start repayment. You'll be in a better position then to know your financial position.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
Yes, there are several options available. The standard plan calls for principal and interest payments over up to 10 years. Of the options available, this has the lowest total interest cost.
