Wondering about the repayment and forgiveness programs you have access to?
Students have the chance to transform loans (usually with a 10-year plan) into another one which is probably more affordable. You can choose between repayment programs and forgiveness programs. They both have good programs, with lots of benefits, but also requirements.
Repayment programs: Pay as you earn (PAYE), Revised pay as you earn (REPAYE), IBR for new borrowers, Income-based repayment (IBR).
Use repayment programs when it’s time to pay your student loans – they can be paid monthly – so more time and less money.
Forgiveness Programs: Public service loan forgiveness (PSLF), Teacher loan forgiveness, Student loan discharge, Police and firefighters student loan forgiveness.
Use forgiveness programs if you want to reduce the money you have to pay, or get rid of them for good – but only if you meet all the requirements.
Every loan you get must have a type of interest rate with it. Even if it’s a variable or fixed rate, some of the money will still go to your loan’s principal, which represent the original amount that you borrowed. The rest of it will go to the interest that is collecting the loan.
Why auto-pay is important
When it comes to paying mortgage or debt, auto purchases or credit card purchases, people don’t think twice about the auto-pay choice. But when it comes to student loans, you might want to give it a second thought. It makes the paying process easier, indeed, and it comes with great advantages, though.
The auto-pay situation helps you with paying your lenders in time. This is why it’s a better choice after you finish college and you have to think about paying methods. If you’re short on money, think about getting one of the agreements listed above, because they have choices in accordance with how much money you make.
Also, if you have your auto-pay account, you might get a reduction in your interest from your lenders. So it’s not actually a bad deal.
Make sure you handle your problems as soon as you can
It’s a big problem when you are late with the payment and you don’t think about an action plan that will make it easier for you to solve everything. Some lenders will let you enjoy some flexibility when you miss one or two payments, but not having a long-term agreement is not a good idea.
If you ignore your account for a longer period of time, you might have to deal with wage garnishment if you’re late for more than nine months.
Some student loan programs have repayment plans which your lender will be happy to help you with, there are, too, other options which you might want to take a look at, especially if you have a delinquent student loan. If you get to the point where your student loan defaults, this will have an effect on your credit score and you’ll suffer some consequences, such as additional expenses.
