Sometimes the right loan repayment plan can totally revamp your ability to pay back your student loans and get rid of your student loan debt. Although you are required to select a repayment plan when you initiate repaying your student loan, you may change the repayment plan any time by contacting the borrower or by consolidating multiple student loans.
There are many repayment plans available for federal student loans such as standard plan, extended plan, graduated plan, income-driven plans, income-sensitive plans, and pay-as-you-earn plan. The selection of repayment plan depends on your income, type of loan, and personal preferences.
Standard Loan Repayment Plan
Standard loan repayment plan offers the lowest rate of interest among all types of repayment plans. It helps you save money by allowing you to pay off your loan in the shortest term, which results in a lower interest amount. Loan borrowers automatically place you on the standard repayment plan if you do not opt for any repayment plan at all.
How does it Work?
Under the standard loan repayment plan, you are required to make fixed monthly payments of $50 or more, depending on the principal amount. The payments are made over a period of 10 years for all Direct loans except Direct Consolidation loans and FFEL consolidation loans.
With standard repayment plan, monthly payments remain same throughout the repayment term. However, small changes may occur if you acquired a loan with variable interest rate because of slight changes in the annual interest rate.
Eligible Loans for Standard Repayment Plans
The following loans are eligible for standard repayment plan:
- FFEL PLUS loans
- Direct PLUS loans
- Direct and FFEL consolidation loans
- All direct subsidized and unsubsidized loans
- All direct subsidized and unsubsidized federal Stafford loans
Why Should You Opt for Standard Repayment?
Standard repayment plan allows you to repay your loan in the shortest time, which means that you pay least interest under standard repayment plan. However, this means that you will be paying a higher amount every month. Therefore, standard repayment plan is best for individuals who can afford high monthly payments and want to pay off their student loans in short time.
Standard repayment plan is the most popular repayment option with about two-thirds of all direct loan borrowers opting for it.
How Global Doc Prep Can Help You?
Loan repayment plans can hugely impact your ability to pay back your loans on time. Repayment plans also affect the total amount that you pay back to your borrower. Right selection of repayment plan is extremely important in order to achieve a debt-free, stable financial position. However, with so many repayment plans it often becomes difficult to choose the right repayment plan that suits your monthly income and other preferences.
Global Doc Prep is an organization that helps students and other individuals in managing their finances and organizing their loans. We offer document processing services and help our customers in finding the best repayment plan that can help them to pay back their loans in a timely and stress-free manner.