College graduates who have a sizable amount of federal student loan debt may be able to lower their monthly payment through an income-based repayment program, but there are also options which may offer forgiveness through this particular repayment plan which can benefit traditional students who do not qualify for a shorter term forgiveness opportunity. However, many students have typically sought out an income-based repayment program for their federal student loans because they cannot meet the traditional minimal payment which may come with their debt and, as a result, fear they may miss payments and do damage to their credit without help.
Typically, graduates who qualify for an income-based repayment plan will not have to meet a monthly payment higher than 15% of their discretionary income, which for some, has allowed them to easily afford the payment that is due on their student loan debt obligations. Also, graduates who are not in a field, like a public service sector, which would allow for them to have their student loan debt forgiven after 10 years, may still qualify for student loan forgiveness through one of these income-based repayment plans after a repayment period of 25 years.
There has been concern by some graduates who feel that these plans may cause the overall costs they must meet on their student loan debt to rise since they can extend the repayment time period to one that is longer than had they remained on their traditional repayment schedule. Yet, there may be options for some forgiveness on interest if, after 25 years, the graduate in an income-based repayment program has not paid all of the interest which has accrued, and there are also options off paying more than the minimum monthly requirement through this income based repayment plan if graduates can afford to do so as this can help erase debt sooner and typically comes without a prepayment penalty.
However, when it comes to affording student loan repayments, there are options outside of these income-based repayment programs, like debt consolidations or forbearance options which have helped students in the past. Exploring these options and calculating the costs of an income-based repayment program as it relates to one’s particular student loan debt situation is often advised and will be necessary for graduates who are looking for the most affordable route to erasing student loan debt but also may be in a position where they need a more affordable monthly payment to avoid defaulting on their loans.