Completing education from renowned colleges or universities is often the dream cherished by many students. Once they begin their college days, apart from academic stress, financial stress would be affecting them. The different tuition fees, expenses of purchasing books and other materials can put the students in trouble. In order to assist the students, PLUS loans are offered to students so that they could avoid the financial hassle to some extent.
Since students require repaying the loan amount in monthly installments, they would wish to get the amount lowered. Let us consider the federal student loan repayment option which is offered for Direct loans, Stafford, Perkins, Plus, NSL, Heal and HPSL. The defaulted student loan can be consolidated. It is the best way to deal with student loan repayment.
For a normal student loan, consolidation cannot cause any kind of problem. Perkins loan is the one that face such issue during consolidation. A student in school could enjoy subsidy for Perkins loan by the Government. When you choose to consolidate Perkins loans, the subsidy that the student enjoys will not be offered anymore.
The main advantage of consolidating a student loan repayment will help you to make a single monthly installment and the rates will be fixed. As the repayment amount will be lowered, the repayment will be extended for a longer term like 30 years. If you have acquired Stafford loan, it would be better to consolidate your loan repayment during the grace period, which is .6% lower.
Let us check the repayment options of Stafford loan.
- During the repayment period, both interest and principal amounts are due for each month.
- The repayments, which appear as small in beginning, will gradually increase and they term as a huge amount over time.
- Most often, monthly repayments are decided after considering the monthly gross income of the borrower. A percentage of the monthly gross income will be moved towards federal student loan repayment. Stafford loans provide income sensitive plan for repayment of students’ loan.
- Borrowers get payment relief through extended repayment option offered by Federal Stafford, Alternative loan/federal consolidation loan and Federal PLUS. The repayment term would be about 25 years.
- There would be other institutions that hold your loan and hence through serialization all of your loans will be merged into a single account. Thus, you can make a single repayment with the actual terms and interest rates.
These are the different methods of assisting students with loan repayment. A careful study of the same and making a proper choice can help lessen your financial burden to a great extent.