Myth: Federal Student Loan Repayment Plans are Rigid and Inflexible

Federal student loan repayment plans are much more flexible than you think

Flickr user Daniel Oines

The government is infamous for its red tape and paperwork. It can sometimes feel like you’re doing back-flips and jumping through hoops just to get things done. Add that mentality to student loans, and it’s no surprise that many people avoid federal student loans. Federal student loan repayment plans are inflexible and have strict rules, right?

However, it’s highly recommended that students pursue federal loans before private ones. If that sounds contradictory, read on to learn the truth about federal student loan plans.

Federal Repayment Plans

There are actually a number of options when it comes to federal loan repayment. What works for you might not work for another student, and vice versa. There’s the Standard Plan, a 10 year repayment with fixed monthly payments. A Graduated Plan, where monthly payments are lower at first and then increase every two years or so. An Extended Plan, which takes place over the course of 25 years. The Revised Pay-as-You-Earn (REPAYE) Plan, which takes 10% of your monthly income towards the loan. Income Based Plan, where 10–15% of your income goes towards the loan and is recalculated every year.

There are additional federal student loan repayment plans as well, each depending on what type of federal loan you have. But the presence of all these options makes finding a plan that works for you easier. The right plan can have a great affect on your loan and debt.

Discover more on the Federal Student Aid website.

Student Loan Forgiveness Programs

Did you know that federal student loans can be forgiven? There are conditions, of course, but if you qualify you could find some or even all of your remaining debt gone. After 120 payments in a full-time job that qualifies, you could become entirely debt-free.

Qualifying work can include the following:

  • Working with the government at any level (federal, state, local, even tribal)
  • Working at a non-profit organization
  • Volunteering with AmeriCorps or the Peace Corps full time
  • You work in public service

Teachers, firefighters, members of the military, and dedicated volunteers (among others) can have their hard work rewarded and their student loan debt forgiven. Keep in mind that even though you may qualify, applying for student loan forgiveness and being forgiven is difficult. You may be declined, even if you work in one of the qualifying fields.

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Financial Aid Priorities

Student loans should be a last resort when it comes to paying for college. But if you find your scholarship and grant opportunities exhausted, turn to federal student loans first. Given their flexibility (and generally lower interest rates) they’re a more ideal option than private loans. Federal student loans, in general, are much more flexible and forgiving than private student loans. Private student loans don’t have as many as, or any, of the benefits that federal loans have.

However, if you do find yourself still in need of private loans, it’s best to find one that fits you well. With College Raptor’s free Student Loan Finder, you can compare lenders and interest rates side by side!