Loans – Getting Started & Next Steps

Financial

Things Every Student Should Know About Student Loans and Obama Loan Forgiveness

May is considered the most important month for students who are on the verge of graduating. Apart from your final exams, and the dream job you’ve been wanting all throughout your life, it is also important to think about your student loans. Expect that after graduation, you’ll need to have cash to cover the costs of repaying your student loans. It is really difficult repaying multiple loans as compared to only one loan. It is really confusing thinking that you need to deal with different agencies, and sometimes you won’t even know the amount you owe and when you should need to pay. Now, repayments can be simplified with a small dose of organization, and all you have to do is to obtain the necessary information so you can write it down or just create a direct debit account so the payment will just be taken out.

One way to reduce your loan is by availing of Federal Direct Loan Program or Obama Student Loan Forgiveness. Obama Student Loan Forgiveness applies to federal student loans but not to private loans. With this program, a borrower receives a lot of benefits, such as consolidation of multiple federal loans into one new loan, and the borrower is given repayment plan options that are more affordable and flexible. Obama Student Loan Forgiveness Program offers repayment options including standard repayment, graduated repayment, income contingent, income based, and pay as you earn. For standard repayment, a fixed amount is paid by the borrower for the entire life of the loan, basing on the interest rate, term of the loan and borrowed amount. With graduated repayment, you can make lower payments, lower than the standard repayment plan but there is a gradual increase in the amount every two years. The borrower makes payment basing on his income in an income contingent plan, as well as basing from the interest rate, loan balance, and family size. Income based repayments are based on the borrowers’ family size and income, not considering the interest rate and loan balance. PAYE or Pay as You Earn repayment has the lowest monthly payment basing on the borrower’s income or ten percent of the discretionary income.

As a student loan borrower, finding out your loan’s grace period is also important. It is typically six months but it can reach up to nine months depending on the type of loan. It gives you more time to find money to pay your loan. Indeed, you don’t have to stick to standard or traditional repayment methods because there are a lot of options out there, feel free to check our website for more information.