You will have five repayment options – Stafford loans, Supplemental loans for students, PLUS or Grad PLUS.
The instalments are paid equally and the term period is generally 10 years. If you have a sound financial situation, and you are confident about repaying the money, then this is the best plan to consider.
Loans are paid equally for a longer period of time. The longer is the time period, the smaller are the instalments. This option is for borrowers who take direct loans. The term can exceed up to 30 years. However, with an increase in time, the interest also increases gradually.
In this case, the loan payments start low, but increase gradually with time. They must at least be equal to the amount of interest accruing per month. If your earnings are low, but you expect them to rise over the period of time, then this is the best plan to consider.
INCOME SENSITIVE REPAYMENT
The repayments are based on the income of the borrower. They generally start low and increase with the increase in income of the borrower. The lender and the borrower decide on the payment schedule, which will be based on the borrower’s current income and future earning potential. The loan is applicable for only those who seek for Stafford PLUS OR Grad PLUS loans from private lenders.
INCOME CONTINGENT REPAYMENT
Borrowers who consider federal loans are eligible for this facility. PLUS, and Grad PLUS loans are not applicable. The borrower’s total debt and current income are taken into account to determine his/her eligibility for the repayment facility. This is the only plan, where the monthly interest can be lower than the interest accrued.
INCOME BASE REPAYMENT
The maximum term for this repayment facility is 10 years. It is only applicable for federal loans. If you have some kind of financial or economic hardship during a particular month, then the amount can be adjusted annually. If you meet specific criteria, then the outstanding balance can be cancelled.