There are a plethora of ways on how to choose best student loan repayment plan in America for paying off your federal student loans. This post has been solely created by keeping in mind all the major challenges of paying that student loan off without considering one as a headache that can only dig you a deeper hole of debt. You can lower your monthly payments by choosing the best appropriate plan that depends upon your income, the budget you can afford and your expenditures or many other flexible options.
Here are certain ways on how to choose best student loan repayment plan in America:
1. Learn about the different options available to you
There are almost 4 different kinds of student loan repayment plan that you can choose according to your financial budget and monthly income:
a. Standard Repayment- It is a repayment plan that lasts for the timespan of 10 years. It allows you to pay a fixed amount of money every month without any negotiation.
b. Graduated Repayment- This one has the same lifespan of 10 years to pay off your debt but the monthly payment will be in small amounts at first and will keep on increasing after every 2 consecutive years.
c. Extended Repayment- This plan allows you a timespan of 25 years to pay off your debt and the monthly payments can be fixed or graduated based on your financial budget.
d. Income-Driven Repayment- This plan allows you to cap 10 to 25 percent of your discretionary income. It is one of the best options on how to choose best student loan repayment plan in America.
You need to be aware of the fact that these flexible options are only available with federal student loans. Personal student loans do not allow you to adjust the monthly payments according to your financial budget.
2. Make an estimate on how much your budget allows you to pay monthly
There are various budget planning apps available on the play store that can help you manage your budgets easily and determine the cuts you can make to adjust the monthly payments in order to pay off the debts. A simple spreadsheet is enough to make all these changes to your expenditure and make the budget cuts. When you finally have the estimate on how much you can pay without making a hole in your pocket, you can choose from the above-mentioned methods to pay off your debts. You can use various tools to calculate the amount you will need to pay for every method listed above and choose accordingly.
3. Understand the interest varying on each category and choose the best suitable plan
To take out the guess from what which option mentioned above would be best for you, a student loan calculator can do the trick. It is a simple application that can calculate the amount of interest based on your loan amount and that period of repayment you choose and can give you an estimate on what plan would be suitable for you according to your financial budget. A little planning can tell you if a fixed or a graduated loan repayment would be best for you depending on your monthly income. The calculators can make you save big by giving you an estimate on how efficient planning works. You can have a quick idea on how to plan your finances well so as to save for the future.
4. Consider refinancing as an option
One of the best options on how to choose best student loan repayment plan in America is considering refinancing. For instance, if you have an income-driven plan that pays the fixed amount of debt share every month and you start earning more, than you do have the opportunity to refinance your student loan and pay off the debt easily and without much delay. A private lender can allow you to refinance your loans and even combine multiple of your loans that can allow you to pay off your debt much faster. You can even consider forgiveness option and choose the best plan for you according to your budget and conditions.
Do check out our blog post on Best Debt Consilidation Loan Options in America.