Capitalize On Income-Based Repayment Plans To Avoid Student Loan Default

Use income-based repayment plans to avoid defaulting

Flickr user tom_bullock

Student loan default is becoming increasingly common across the USA. Unfortunately, this can have serious repercussions. Not only does it earn you a black mark on your credit history but it also pushes you even further in debt. But what do you know if you are just not earning enough to pay back your student loans? That’s where income-based repayment plans come in.

Income-Based Repayment Plans

The answer lies in opting for income based repayment plans. With this repayment plan, no matter how small your earnings, your loan payments will always be affordable. This is because the amount you have to pay back every month is directly linked to the amount you earn. In most cases, the amount you have to pay back every month is limited to about 15% of your total earnings.

This means, if you earn a higher salary, you pay back more and if you earn a lower salary, you pay back less.

While an income based repayment plan could extend your loan term by a few years and increase the total amount of the loan, it also reduces your chances of defaulting on your loan, which is a far worse scenario.

Student Loan Refinancing Made Simple.

Fixed rates from 2.47% - 5.99% APR

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Go Beyond the Standard

It is important to understand that you are not forced to stick with your standard loan repayment term. If you think you are at risk of defaulting, speak to your lender and ask to switch over to an income based repayment plan.

Use College Raptor’s new Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to find the ideal student loan for you!


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.88% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.64% - 5.65%*
Fixed APR: 2.25% - 5.75%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.96% - 7.02%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 5.97%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 5.33%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.84%*
Fixed APR: 2.99% - 4.94%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

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