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Common Student Loan Repayment Options

Hands spelling out "Student Loan" with colorful letters on desk laptop and papers.

What are the Most Common Student Loan Repayment Options?

There are multiple types of student loans—government subsidized loans, unsubsidized loans, private loans and lines of credit. Each of these comes with a unique interest rate and set of rules governing repayment. That being said, we’ll explore the most common repayment options available on subsidized and unsubsidized student loans.

Structuring your Student Loan Payments

There are several different repayment options when it comes to student loans:

  • Standard- for a period of 10 years, you pay a fixed rate.
  • Graduated- for a 10-year period, payments start low and increase in two-year increments.
  • Extended- make fixed or graduated payments over 25 years.
  • Revised pay as you earn- pay 10 percent of your monthly discretionary income
  • Income-based repayment- pay 10 or 15 percent of your monthly discretionary income but not more than you’d pay on a 10-year fixed rate.
  • Income-contingent repayment- pay whichever is less— 20 percent of your monthly discretionary income or a fixed rate 12-year repayment plan.
  • Income-sensitive repayment- pay a variable rate based on your annual income for a maximum of 10 years.

Types of Loan Forgiveness

Working in certain industries for a given period of time, usually a set number of years, can be a way to alleviate some student loan debt or have it forgiven entirely. The caveat is that you must make your regular payments during the time you work these jobs. Failure to pay your loan can disqualify you from being eligible for loan forgiveness. Some of the common concessions for student loans include:

  • Public service, government or non-profit jobs
  • Public school teachers
  • Military service
  • Income-based repayment plan paid on-time for the 25-year term

When your Student Loan is in Default

If you’re behind on your student loans or cannot make your payments, there are negative side effects. Once your student loans have been sent to collections, you can expect harassing collections calls, letters, credit problems, problems getting new credit, and wage garnishment. It’s imperative that if you can’t make your payments, you get help now. Because some student is government subsidized, specific regulations differ from standard creditors that offer lines of credit or credit cards. At CreditGUARD of America, our certified credit counselors can help you better understand your options. While CreditGUARD can’t manage or consolidate your student loans, we can help you with your credit card debt— Call us today!