By Natasha Souza - January 25, 2022

Do Not Give Up on Your Dream of Going to College Before Learning about All These Student Repayment Plans

Study First, Pay Later

Student repayment plans are a type of program that works like a loan to help you pay for college. After signing a contract with the institution that will pay all or part of your tuition, you must return the exact amount plus interests later. In other words, throughout the course you accumulate a debt that can be paid off during or after you graduate. 

The most important thing you should know is that there are several types of programs offered by several types of institutions. Therefore, the requirements for getting your financing will pretty much depend on the rules of each program. 

If you are struggling to pay for a college tuition, do not give up on your dream before reading this article! There are opportunities that can help, a lot. With them, you can study without worrying about money. The important thing is that you choose the plan that gives you a great boost so that you can earn your college diploma! 

Types of Repayment Plans 

SRP – Standard Repayment Plan: With no eligibility requirements, payments are fixed, with loans being paid off in up to ten years. We recommend it if you intend on repaying it in the short term, thus minimizing the interests. But in case you are interested in the Public Service Loan Forgiveness, this plan is not recommended.

GRP – Graduated Repayment Plan: With no eligibility requirements, payments increase gradually, with loans being paid off in up to ten years. Same as before, we recommend it if you intend on repaying it in the short term, but not if you are interested in the Public Service Loan Forgiveness. 

ERP – Extended Repayment Plan: Here there are also no eligibility requirements, but terms will apply for borrowers from the Federal Direct Loan and Federal Family Education Loan. Payments can either be fixed or increase gradually, with loans being paid off in up to 25 years. We recommend it for those who want smaller monthly loan installments. 

PAYE – Pay as You Earn: It is available for those who received a disbursement of a Direct Loan as of October 2011. We recommend it for students who want smaller monthly installments or who are interested in the Public Service Loan Forgiveness. 

REPAYE – Revised Pay as You Earn: This plan is intended to borrowers who hold an eligible Direct Loan. We recommend it for those who want smaller monthly installments, however being aware that interests can be higher than an SRP, as well as people interested in the Public Service Loan Forgiveness. 

ICR – Income-Contingent Repayment Plan: This plan is intended to borrowers who hold an eligible Direct Loan. We recommend it for students able to commit a large part of their income to the loan installments but cannot afford an SRP and are interested in the Public Service Loan Forgiveness. 

IBR – Income-Based Repayment Plan: For this plan, you must either hold a Direct Subsidized or Unsubsidized loan, Subsidized or Unsubsidized Federal Stafford loan, PLUS loan, or a consolidation loan. You must also have a high debt. Therefore, we recommend it if you have a high debt balance, want lower monthly installments, and are interested in the Public Service Loan Forgiveness. 

ISR – Income-Sensitive Repayment Plan: Intended to holders of a Federal Family Education Loan, the monthly installments are based on their annual income, with loans being paid off in up to 15 years. We recommend it for FFEL borrowers who want monthly installments smaller than those of an SRP or GRP. But not for who is interested in the Public Service Loan Forgiveness.

How to Choose Your Student Loan?

To avoid any unpleasant surprise, it is important that you research other issues and costs regarding the contract, such as additional interests, the need of a guarantor, renewal terms and conditions, etc. Do not  forget to analyze your long-term needs, as they are more difficult to predict. And the end goal here is to boost your career, not to create some large debts. 

Finally, know that there are other less traditional options from which you can choose. For example, you can apply for a scholarship, get a paid internship or a part-time job, among other options. But we discuss more about this in our other articles. So, do not miss out!  

How did you enjoy our content? Tell us what you think about student repayment plans! Everyone should be able to invest in education, as this is the path towards financial health.

About the Author Natasha Souza


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