Under a standard repayment plan, your monthly payment amount is fixed for a loan term as long as ten years. That might sound like a long time. But it's actually the shortest time frame available out of all the repayment options. You have the option, however, of prepaying any of your student loans if you're particularly flush with cash. However, most college grads will need ten years, and then some, to fully repay their college debts. Depending on how much money you borrowed in school, it's possible that your loan term could be shorter than ten years. But no matter how many years it takes you to repay your obligations, with the standard repayment plan you must make payments of at least $50 a month until your loans are paid in full.
If you come out of school, land a high-paying job, and have managed to keep your other expenses fairly low, the standard repayment plan is your best bet. This is the plan that will let you pay off your student loans fastest and with the least amount of money paid in interest. Standard payment plans also offer the best interest rate out of all the plans available.
To give you a sense of what the average college grad might pay, coming out of school with $20,000 in debt, I've used one of the online college loan calculators found on FinAid's Web site. All of the analyses have been calculated on FinAid's Web site to demonstrate the difference in these types of loans. However, there are many other calculators out there, and your lender can also assist you with the math.
In this projection, the monthly loan payment was calculated at 119 payments of $230.16 plus a final payment of $230.27. According to FinAid, it's estimated that you'd need to earn at least $27,619.20 a year in order to afford to repay this loan. That estimate assumes you'll be spending 10 percent of your gross monthly income on student loans. But if you earned far less than that $27,619.20 figure, remember that your payments can be as little as $50 a month with the standard repayment option. (Thus the FinAid "Minimum Payment" amount show is $50). Also, the results above assume you're paying interest charges on any unsubsidized loans while you're in school. If you're not and if the interest is capitalizing, or being added to your outstanding balance, your total payments would be higher than the estimates above.
Article Title : Standard Loan Repayment Plans
Comment not found for this article.
Share this story:
EdFed introduces… Awareness… Learnal
At, EdFed, we proudly introduce 'articles on student loans' and 'Learnal - the journal to learn from', our free newsletter on student loan management, which is sure to keep you informed of the latest events and happenings in the student loan market. To receive your copy of the above just use the RSS feed below and add this to your "My Yahoo", blogs, newstickers, and other similar channels accepting distributable content.
Click here to sign up for our Weekly Newswire now!
How EdFed Helped others!
By consolidating through EdFed, I locked in my current low interest rate, beating the rising rates. Then they went one step further and reduced it an additional 1.25% through their exclusive benefits. EdFed is the lender that takes consolidation one step further. - Jamal B. Atlanta, GA
Shoot for the moon. Even if you miss it, you will land among the stars.