Total Higher Education
Know Your Repayment Options
Managing your student loan obligation may not seem like a priority but taking the time to understand your options and create a financially savvy repayment strategy now can provide you with thousands of dollars in savings. So even if repayment doesn’t start for a few more months or a few more years, secure your savings by implementing smart choices today.
With graduation just around the corner, many students often have questions about their repayment options. Know that various repayment options are available to meet your financial needs. Because each student’s situation upon graduation is different, it’s important to create a repayment strategy that suits your unique situation.
IBR Worksheet
Repayment Ability Chart
Shows the relationship between student loan debt and expected income, and suggests various repayment options to make repayment manageable.
Repayment Strategies
Use this calculator to understand your repayment options and create a strategy that fits your situation. You will need to contact your lender/servicer to implement your repayment strategy.
RepayReady
Provides borrowers with a personalized repayment strategy and the ability to implement the repayment options they require.
A few years ago, consolidation was a great way to lock in low interest rates on variable rate Stafford and PLUS loans. Student borrowers also used consolidation to bring together their loans held by different lenders, or to lower their monthly payments (since consolidation extends the term of repayment). More recently, with the introduction of fixed rate loans this program’s usage declined.
Variable rates are once again low. Loans disbursed between 07/01/98 and 06/30/06 have the following rates effective 07/01/2010 through 06/30/2011:
- Stafford Loans (In-School / Deferment / Grace) - 1.87 percent
- Stafford Loans (Repayment or Forbearance) - 2.47 percent
- PLUS Loans - 3.27 percent
If you have variable rate Stafford or PLUS loans and want to consolidate you’ll have to consolidate your loans into the government’s Direct Consolidation Loans program.
But if you have fixed rate loans with rates that won’t change and your goal is to lower your monthly payments, you have other options besides consolidation. See the Repayment Options section for guidance.
Federal Consolidation Program Features
Borrowers must be in their grace period, deferment, forbearance, or have entered repayment on each loan included in a consolidation.
Federal Loan Consolidation
See estimates of the current interest rate, monthly payment options and the associated total loan cost for the federal loans that you want to consolidate.
Public Service Loan Forgiveness
Effective July 1, 2008, a borrower may consolidate his or her FFELP loans into the Federal Direct Loan Program to take advantage of the public service loan forgiveness program. Understand the details about this program.
Repayment Strategies
Use this calculator to understand your repayment options and create a strategy that fits your situation. You will need to contact your lender/servicer to implement your repayment strategy.
Without adjustment your loans will enter repayment on a standard repayment plan.
Take advantage of various repayment options so you can:
- Make your payments more manageable
- Make your payments go farther by reducing higher-rate debt faster than lower-rate debt
Students who took the time to set up a repayment strategy were surprised how easy it was to implement and how much money it will save them.
RepayReady
Provides borrowers with a personalized repayment strategy and the ability to implement the repayment options they require.
At graduation, some of your loans will enter immediate repayment while others will move into a grace period. If you are not able to begin repayment on your loans, you can apply for a deferment or request a forbearance.
A deferment is a postponement of repayment for a specific time period. You must apply and meet certain criteria in order to receive a deferment. You must reapply in order to extend the deferment period. During deferment, interest accrues only on unsubsidized loans.
A forbearance is a temporary postponement of payments available to those who do not qualify for a deferment. You must apply and receive approval before your forbearance can begin. Interest accrues on both subsidized and unsubsidized loans during forbearance.
Four commonly used deferments:
Hardship Deferment
Use this form to apply for an Economic Hardship Deferment if your begin date is on or after 07/01/2009. This deferment applies to Federal loans.
In-School Deferment Application
Complete this form to apply for an in-school deferment.
Parent PLUS Borrower
Use this form to apply for an in school deferment and a six month grace period. This deferment applies to Parent PLUS disbursed after 06/30/2008.
Unemployment Deferment Application
Complete this form to apply for an unemployment deferment.
Now that you’re done with school, you may be eager to ditch your frugal college existence for a jet-setting lifestyle. But before you do, remember that sticking to a budget while taking your next significant life step is going to have long-term benefits.
Out-of-School Budget Worksheet
Helps graduating students create an out-of-school budget.