Whenever we start to think about out education, there are always some obstacles when it comes about how to pay proper education course. Which kind of student loans are right one for us and which ones we should avoid? What are possibilities?
When we already choose student loan that is right one for us, what can we do to reduce some of expenses, or how to lower student loan payments? These questions are the ones that should be answered. There is always a way how to lower student loans payment to manageable level.
Last thing you need is to be stuck with some sky-high payments. Fact that you using one, is reason to be more economic when it comes to your payments, especially if you already struggling to meet them. How? Don’t worry; there are ways, even variety of ways how student loans borrowers can reduce them once for good. There are options for both – Federal or private loans. But, there will be pros and cones. We will look to two plans and show their advantages and disadvantages. This is the way how you should do your research and consider which student loan plan is right for you.
First option is to apply for an income-driven repayment plan. These kinds of plans are specifically designed for those students who are on federal loan deals for reducing their payments according to amount they earn. Never the less, there are always pros and cons. One of these plans is REPAYE plan. REPAYE plan is available to most students who are holders of federal student loan.
I have mentioned pros and cons. Pros are: fact that there are no income restrictions for this payment plan. Also, most federal students are eligible for this plan. On other side, there’s no some projection of how high your payments can go, the fact is that if your income goes up, so do your payments. Also, if you have this plan and you are so naive to get married, your spouse’s income will be considered when bank start to determining your monthly payment. As you have predicted, these last two sentences were cons.
So, if you are choosing this plan, don’t get married, stay bachelor for as long as it should. If you are graduate, your bachelor status should endure for 25 five years, and if you are undergraduate, you’ll have to wait for 20 years. Monthly payment won’t be more than 10 percentage of discretionary income.
Pay As You Earn
Next choice PAYE (Pay As You Earn). This choice is similar the last on, except last one benefits to more borrowers, this one don’t. The PAYE plan is attached to a smaller group of borrowers. Newer the less, REPAYE doesn’t replace PAYE. With this plan, your monthly payments are capped also to no more than 10 percent of your discretionary income. Pros for this plan are that your payments will be caped to 10 percent of income and won’t rise if your account money do. Cons are there also. Problem is that if you want to qualify to this plan, your income status should be not so great, which means that your annual salary should be smaller than your outstanding debt. Also, any balance that is forgiven is subject to taxes.