As you’re paying off your student loan, you may find that your current repayment plan isn’t working well. It’s understandable and the reason why many loans offer alternate payment plans.
So, can you change your student loan repayment plan? The good news is that most lenders offer them, and you only need to make contact to learn the different options available.
Changing Your Repayment Plan
For most people, changing their plan means paying less each month, though protracting the loan period. It also means that while you’ll pay lower, there will be more interest to pay over its lifespan. You’ll pay more because of it, but there might not be an option available right now if you cannot sustain your current plan.
Repayment is always an option to avoid defaulting or taking a hit on your credit score. If you’ve decided to go on this path, you’ll need to:
- Check the different plans available through the Federal Student Aid website. They have a loan simulator that can help you forecast your payments.
- Contact your loan servicer. You do not need to go to another entity to get a repayment plan.
- Apply and submit the requirements.
Make sure to check the new payment due dates listed on the plan. You may need to contact your lender once in a while to confirm if there’s been any change.
Types of Repayment Plans
There are several types of repayment plans, all of them have distinct advantages. It’s best to use the Student Aid loan simulator before finalizing your decision.
Income-Contingent Repayment Plan (ICR)
ICR is an option for those looking into student loan forgiveness. You’ll pay 20 percent of discretionary income or fixed payment for 12 years, depending on your income.
Standard Repayment Plan
You’ll pay higher each month but less over time compared to other repayment plans. In this plan, you’ll pay a fixed amount each month until the loan pays off within ten years.
Graduated Repayment Plan
It works similar to the standard plan in that you’ll complete payments after ten years. The difference is that it first starts with a low amount and increases over time.
Pay As You Earn (PAYE)
Those who borrowed after Oct 1, 2008, and have received a Direct Loan disbursement beyond Oct 1, 2011 are eligible. You’ll pay 10 percent of discretionary income, not exceeding the standard plan.
Income-Based Repayment (IBR)
You can only get this if you have a high debt compared to your income. You’ll pay 10-15 percent of discretionary income, not exceeding the standard plan.
Extended Repayment Plan
You must have more than $30,000 in loans. You’ll extend its payment period within 25 years, and you set it either at fixed or graduated payments.
Revised Pay As You Earn (REPAYE)
It works like PAYE, but each year the plan recalculates depending on your income and family size.
Income Sensitive Repayment
The loan extends to 15 years from 10. Only those under FFEL Program loans can qualify.
You have some time to check if a payment plan works best for you before committing to it. Check each carefully and make sure you’re getting into repayment with the benefit you need.