Now that you are a few months removed from school, its time to start thinking about repayment. Your repayment period begins at the conclusion of your grace period. There are a few things you need to know about repayment:
Exit Counseling
You will receive notice about this when you graduate or start attending school less than half-time. This session will provide information on your loans and when repayment begins.
Grace Period
When you graduate or withdraw you will have a six month time period where you will not be responsible for making payments. This time will allow you to get your finances in check and determine the amount of income you will need to place on your student loans each month.
Fees and Interest
Loan fees are deducted from each loan disbursement that you will receive, which means the proceeds you received were less than the amount that you borrowed. You will be responsible for repayment on the entire amount you borrowed.Interest will have accumulated on your loans. This is a percentage of the original loan amount that is added to what you will be required to pay. It is a charge for the amount of money you chose to borrow. Everyone will have interest to repay, regardless of loan type.
Loan payments and balance
You are probably wondering how loan payments are applied to your balances. A loan holder first applies your payments to any late charges or collection costs if this applied to you. Next, you will be paying on your interest. The remainder is applied to the principle balance.
Payment Options
Standard Repayment Plan- Your payment will be at least $50 a month and you will pay a fixed amount for up to ten years.
Graduate Repayment Plan- Payments will start out lower and then gradually increase approximately every two years. You will have 10 years to repay your loans in full.
Extended Repayment Plan- As an FFEL borrower with more than $30,000 in outstanding loans, you will have a fixed monthly payment. This payment is lower than a Standard Plan. However, you will pay more for your loans because of interest.
Income-Sensitive Repayment Plan (FFEL Loans only)- Payments are based on your income. If it were to increase or decrease, your payments will as well. You have a maximum of ten years to repay.
Income-Contingent Repayment Plan (Direct and Direct Plus Loans)- Your monthly payments are based on your annual income, family size, and total amount of loans borrowed. You have 25years to repay under this plan and the unpaid portion will be forgiven.
Income-Based Repayment- Monthly payments will be made based on your income during any time of financial hardship. Payments will be adjusted annually and your repayment period may exceed ten years. You must meet certain criteria for this plan to be eligible.
