Income-Based Repayment Options For Student Loans–Will Certain Repayment Plans Help With College Loan Affordability?

Income-based repayment options for students with federal student loan debt may help graduate’s avoid missed payments or even defaulting on student loan repayment obligations. Understandably, many students who have exited college in the recent months may have had a difficult time finding employment opportunities, but when a grace period has ended on student loan debt, repayment is required nonetheless.

However, income-based repayment programs, like those on federal loans, may offer an eligible college graduate a cap on the amount they are required to pay based on the amount of their income, or in some cases, the size of their family. Some students turned to student loan consolidation plans, which can offer affordable options to student loan debt repayments, but for those who may have a particularly high amount of student loan debt, even student loan consolidations may be too costly.

There are also students who have used this program upon graduation as a way to make their monthly payments more affordable, but a longer repayment time frame and interest could cause their overall payments to be higher in the long run. As an example, students who are participating in an income-based repayment plan will have their loans canceled after 25 years, but they may have extended themselves past their traditional repayment time frame.

While there are some cases where a high amount of debt was acquired for meeting college tuition costs, and as a result an individual’s income is simply unable to meet these requirements, excessive costs due to an extended repayment period and interest may simply be a graduate’s only option. However, certain conditions may warrant a student loan lender to offer additional assistance to graduates outside of an income-based repayment plan.

There are many graduates who simply have been able to lower their monthly payments as a result of these repayment plans, but it is true that may have had higher overall costs. However, these plans have been helpful in some cases by allowing certain graduates to avoid taking a hit to their credit score due to missing payments or defaulting on student loans.