So, you took a loan from the Government or Private firms to complete your studies, and now it is time to pay back, and you do not know how to. It is one thing to get a student loan and another to repay it.
You can apply and get a loan within a month that would take you through your study period, however, repaying it can take a longer period. Many student loans require you to start paying back after you graduate, giving a 6 months grace period from your graduation.
However, Some others prefer you get settled financially, which means you get a job and then pay some percentage from your salary every month. All these depend on the repayment plan you chose, and there are quite a few of them.
Types of Repayment Plans
- Standard Repayment Plan
- Graduated Repayment Plan
- Extended Repayment Plan
- Revised Pay As You Earn Repayment Plan
- Income-Based Repayment Plan
- Income-Contingent Plan
- Income Sensitive Repayment Plan
- Pay As You Earn
The repayment plan you chose will tell if your loan repayment will run for the next 10, 20, or 25 years. Your Federal student loan may be forgiven if you make your early years repayment on time, or if you become a public service worker.
You must pay back your loan. Depending on your loan lender, there may be consequences if you, don’t pay the loan, miss a payment, or you don’t complete your payment.
How Do You Repay Your Student Loan?
The date when you start repaying your loan hinge on the type of loan you applied for. Loans such as Direct Subsidized/Unsubsidized Loans, Subsidized/Unsubsidized Federal Stafford Loans, and Some private student loan gives you a 6 months grace from your graduation date to begin payment. To repay your loan, you should;
- Know which loan you are applying for, and find out if they offer you a grace period.
Choose a repayment plan: Depending on the loan received. Find out the interest rate, the date for payment monthly, and the repayment period. The repayment plan you have chosen will determine if the repayment period will run for 10 years or more.
Get a Job and establish a budget: After you graduate, you still get to pay bills such as house rent, utilities, and your feeding too. They all minus from your monthly income, and could affect your repayment plan. If you can set a budget then you can look for ways to control spending to meet them. For instance, if you are renting an apartment, you may have to get a roommate.
- If you cannot meet up with the loan repayment, you may have to consider choosing a repayment program that allows you to pay a certain percentage of your income, instead of the agreed flat rate.
- In the absence of a job, or you don’t have what you are doing at the moment, you can apply within the 6 months grace period for a deferment or forbearance permit. A deferment permit, allows you to suspend your loan payment for 3 years, while forbearance allows you for just a year.
- If you are lucky, your employer may come to your aid. Many employers offer student loan repayment benefits to help them clear their debt.
- Another thing you can do is to combine and refinance your loans. If you get yourself a job and accumulate enough credit history, you could combine two or more loans or refinance them to reduce the interest rate, and extend the number of years for repayment.
- Your loan can also be canceled if you become disabled and unable to work if there is a discrepancy in the information provided when obtaining the loans, or your school closed down while you were still schooling there.