It is a daunting task to analyze, interpret, and implement federal financial aid regulations these days. Hopefully the information I provide will help you understand and locate the financial aid you need to earn your online degree.
Yes, you do have to repay your student loans! And yes, I do get questions from students thinking they don't. However, loan repayment options are at their best in years. Here's why:
- Traditional repayment: if you have the income, this is the best option to repay your loan to keep interest at a minimum. You will have an option of paying up to 10 years when you go into repayment. Plan on an estimated $125 per month for every $10,000 you borrow. If you have a great paying job and can afford it, choose a lower term repayment (say, 5 years) and pay it off as soon as you can.
- Graduated Repayment plan: this plan allows you to start with smaller payments early in repayment, with increased payments every 2-3 years, with a maximum of 10 years. If you have a job where you start with a low salary, but expect promotions or pay increases, this might be for you. However, you will be paying more in interest rates because of the lower beginning repayments.
- Extended Repayment plan: with this plan you can stretch your payments out over a period of up to 25 years. Even though your payment is usually less than the traditional repayment plan, you'll be paying alot of interest. I don't recommend this plan unless it's absolutely necessary.
- Income-Based Repayment plan: If you opt for this plan, your payments will adjust depending on your annual income, loan amount, and household size. Again, you could be paying a lot more interest.
- Loan consolidation: Sometimes it's in the student's best interest to combine all federal student loans into one loan for repayment. This might be especially useful if you have loans through two or more programs (Direct Loan, Stafford Loan, and/or Perkins Loan). However, I cannot offer my opinion one way or another. I do suggest you analyze your total monthly loan repayments and then contact your lender of choice and ask them to project a monthly repayment under consolidation. My understanding is that you must consolidate all loans under the Direct Loan consolidation if you receive a Direct Loan and want that included in the consolidation.
There are repayment differences between Stafford Loan and Direct Loan. If you have a combination of these loans, I advise you to look at the publication from the Department of Education to get additional information about repayment plans, including consolidation.
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About ter
I have been a financial aid advisor for nearly 25 years now! Time really does fly. Like other e-learners, I acquired my Bachelor of Arts degree and my Master of Science degree while working full time and raising a family. My coursework consisted of classroom instruction, online and independent study courses, and weekend classes.
I began in financial aid as a secretary, and have worked my way to senior level financial aid advisor at a public four year college in the Midwest. When I began in 1984, we did not have computers, so I have seen the evolution of technology and its impact on education and financial aid.
My husband and I have four children in our household. My daughter and stepson are both in college. My son and stepdaughter are high school freshman.
I look forward to being a part of eLearners.com and given the chance to educate students, especially “non-traditional” students, on the ins-and-outs of financial aid. It is a daunting task to analyze, interpret, and implement federal financial aid regulations these days. Hopefully the information I provide will help.