 |
| Student Loans Repayment and Debt Your Study |
How much debt is too much debt? Experts suggest these guidelines:
Students: Some advisers say that the monthly student loan payments should not exceed 10-15 percent of monthly income starting new graduates. Use the Student Loan Calculator to estimate how many colleges and graduate schools or professional debts you simply can manage in relation to your possible starting salary.
Parents: Some lenders advise parents to limit the total debt payment (including student loan payments) to 37 percent of gross revenues. Use the Parent Debt Calculator to estimate the ability of your parents' to take on new debt.
Students can deduct up to $ 2,500 per year student loan interest payments for the life of the loan. Parents who take out loans to pay for their child's education can claim the same reduction. Some limitations apply. Consult IRS Publication 970, Tax Benefits for Education for details.
Loan Repayment Options
Most lenders allow borrowers to tailor repayment terms to suit individual needs and circumstances. Always factor in the total borrowing costs when considering a change to your payment plan.
Standard Payments
Most students repay their loans using a standard payment plan. Standard payment involves making equal monthly payments over a period of 10 years.
Other Payment Options
Federal Direct Loan Program offers flexible payment options as follows:
Extended payment: Depending on the total amount of debt and creditors are involved, the borrower can extend the repayment period to 25 years.
Graduated repayment: Under this plan, payments gradually increase, usually every two years. Remember that your income tends to increase over time, too.
Income-contingent payments: This plan ties the amount of income payments and often allow for a period longer repayment.
Be careful to balance the long-term costs of a payment plan to pay short-term relief. While you pay less per month, you could end up as (and paying) a lot more in the long run because you slow down your principal payments.
You should be able to switch back to standard repayment option at any time. Once you are able, you should also consider increasing your monthly payment.
Payment Tips
Remember to:
Account for the cost when you consider student loans.
Visit the financial aid office if you feel you take more than you can afford. The members of the financial aid staff can advise you on reducing the level of borrowing and managing your current debt.
Loan Terminology
Here are the specific repayment terms you should know:
Loan consolidation: This means combining the loans into a single loan with one monthly payment. You have more time to pay off debts, but the total cost is higher.
Delay: This is the period in which the payment is not required on a loan. For example, you may receive a suspension while enrolled in graduate school or serving in the military, Peace Corps, or public service programs.
Patience: This provision allows you to temporarily stop loan payments because of financial difficulties.
Cancellation: In this case, the borrower is released from the debt, without paying for it. Some government programs allow borrowers to cancel all or part of their loan by teaching in low-income areas or areas with shortage of teachers.
Paying PLUS Loans
PLUS loans popular, non-need-based loans offered by the federal government to parents of students and graduate students depend. Borrowers who qualify for the PLUS loan can borrow up the full cost of education, minus financial aid. Borrowers can choose to:
Defer payments PLUS loan until six months after the date the student ceases to be enrolled at least half-time.
Produced Pay interest monthly or quarterly, or allow interest to be capitalized (added to principal) quarterly.
We use the Parent Loan Payment Calculator to estimate monthly payments based on the payment period, annual interest and principal amount of the loan.
Source for help you : http://www.collegeboard.com/student/pay/loan-center/432.html
Student Loans Repayment and Debt Your Study
