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I Have 30K in Student Loans. What Are My Options?

04/19/2015 12:56 pm ET | Updated Jun 19, 2015

With the average student debt around 30k, most graduates will face this burden soon after they graduate. If you have started paying on your student loans already, you have probably realized that there is a variety of repayment plans available based on your individual circumstances. How do I know which to choose?

At Credible, we help graduates chose from a number of repayment options to better manage their student debt. There is a wide assortment of payment paths for you to take. We’ve compiled a list of payment options for students in various situations and repayment goals.

1.) Standard Repayment Plan

Your loan servicer will usually default your loans to the standard repayment plan. Under this plan, monthly payments are higher, but you will pay off your loan more quickly because you will be paying less in interest over the life of the loan. Monthly payments are a fixed amount of at least $50. They are payed for up to 10 years for all loan types, with the exception of Direct Consolidation loans.

- Learn more about your federal loan options

2.) Income-Driven Repayment Plans

The US Department of Education allows for three different payment options based on your income and must demonstrate “partial financial hardship.”

  • Income Based Repayment (IBR) is either a 25-year payment plan requiring 15% of your discretionary income or a 20-year plan requiring 10% of your discretionary income.
  • Pay As You Earn is a 20-year plan requiring 10% of your income. Both this option and IBR will never take more than the 10-year Standard Repayment Plan monthly amount.
  • Income-Contingent Repayment requires the lesser of the following: 20% of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

3.) Refinancing

It is possible to refinance your student loans in order to get a more competitive interest rate on your loan. Interest rates are at historic lows and refinancing allows you to optimize your repayment for your personal situation (i.e lower monthly payment, lower total repayment). Those who benefit most from refinancing usually have at least a 640 FICO credit score and a debt to income ratio of around 45%, but there are a number of factors that can increase your likelihood of receiving a better offer.

- Explore your refinancing options with Credible

4.) Deferment or forbearance

If you’re in a tough financial situation, it may be possible to apply for student loan deferment or forbearance. These options will allow you to temporarily suspend or reduce your student loan payments. During a deferment, you do not need to make payments and your interest rate is suspended. Moreover, for some types of loans the Federal government may pay the interest accrued. If you do not qualify for deferment, you may be eligible for forbearance. If you’re granted forbearance, you can either stop making monthly payments or reduce them. However, interest is still accrued on your loan.

- Learn more about your deferment and forbearance options

5.) Student Loan Forgiveness

Some students may have part of their loan completely forgiven. In order to qualify for the Student Loan Forgiveness plan you must meet certain requirements. With the federal program, you must make 120 on-time, full, monthly payments on your direct loans. Only payments after 1 October 2007 qualify. The payments must also be under a qualifying repayment plan. Other public service loan forgiveness programs are available on a state and federal level.

- See what forgiveness options may be available to your profession and for all other refinancing needs visit Credible.

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