How to Select the BEST Repayment Plan in Two Steps
Develop Your Own “Best” Strategy*
There’s no single “best” way to repay. Everyone’s life is different. Your “best” plan will be what best fits your life and your financial goals.
|Step #1: Set a Student Loan Repayment Goal|
The first step is to decide what is most important to you in the repayment of your student loan debt. Your options ultimately include:
Minimize TOTAL repayment cost (You’re thinking long term - reducing cost, reducing time, and saving money overall.)
Minimize monthly payments (You’re focused on immediate affordability, flexibility and possibly loan forgiveness.)
|Step #2: Select the “Best” Repayment Plan for You|
The next step is to choose the plan that best supports your goal.
If you’re focused on total cost, you may want to choose one of the
If you want to minimize your monthly payment, you may select one of the which include Income-Contingent Repayment (ICR), one of the two versions of Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). These plans are affordable because payments are limited to 10-20% of your discretionary income (depending on the plan). Keep in mind, the lower the monthly payment, the longer it may take to repay the debt. More time in repayment allows for more interest to accrue - sometimes significantly more.
Crunch Your Numbers: To see payment, interest and potential forgiveness amounts, based on your loan debt, use the .
|Repayment Plans May Be Changed When Life Changes|
Ultimately, you are in control of how to repay your student loans, and to a degree, how much it costs to repay your debt. So start now, set your goals, and then pick the “best” plan for you.
*The information included here pertains only to federal student loans.
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