Student Loan Debt Relief, Here's What You Need to Know

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Student loan debt relief has many options you can choose from when it comes to deciding how to approach paying it off. Read each one and explore how it will affect your payment plan and your life. Each one has merits and disadvantage but anyone of them is better than defaulting on the loan.


You see for the federal education loans, there are four major ways to repay the loan. One is standard while the other three will offer a lower payment per month but they will lengthen the years you will pay and thus increase the interest of the loan. Let us look at them one at a time:

Standard Repayment Option will be offered by the lender. The amount of monthly payment is fixed and the term could be as long as ten years. It will of course depend on the amount of debt. The minimum monthly payment is $50. The monthly payment is higher than the other plans but you pay less interest and so the total payment is lower also.

Graduated Repayment Option starts with lower payment but increases gradually every couple of years. This may a good way to give you the much desired student loan debt relief because at the start of your career, you may be earning less than later. Depending on the loan, the term could be between 12 and 30 years.

Extended Repayment Option lets you stretch the life of the loan to anywhere between 12 and 30 years. It is true the longer the term offers, the lower the monthly payment but this increases the total amount paid. They have an eligibility requirement for this which is that you have more than $30,000 in debt. The good news is you can combine this with the graduated method of paying off the debt.

Income-Contingent Repayment Option is based on the income of the borrower and the total debt amount. Each year, the monthly payments are adjusted to reflect the income received. The term of the loan is up to 25 years after which the remaining balance will be discharged. The trouble is the amount discharged is taxable. Not much student loan debt relief there, huh?

Income Sensitive Option is derived from the income contingent repayment option which allows the monthly payment to be a percentage of the monthly gross income. The following website will give more information on this:

Income-Based Repayment Option was born in 2007 at the passage of the College Cost Reduction and Access Act which is more generous than its predecessors not only because it's open to both direct borrowers and FFEL programs but every year, it recalculates monthly payments based on a lower percentage depending on annual income, loan and household size.

Loan Consolidation Option is for those who want to put together all the loans into one. Bear in mind though that if your loans were pre- July 1, 2006, then you would be able to get a lower interest rate. It is not so if the loans were made post July 1, 2006 as the interest rate on most of these loans were fixed at 6.8%. Here are some more things to consider when consolidating loans:

Don't consolidate federal loans into a private one. There are federal benefits you could lose like deferment, forbearance, cancellation and repayment plans you can afford. Aside from this, federal loans generally carry lower interest rate. So watch for this so that you do not lose the student loan debt relief you are aiming for. Here are more things that may help you decide:

  • You can extend repayment when consolidating the loans which could make your monthly payments lower.
  • Get the best deal for you may only be able to consolidate only once. Exceptions to this rule are as scarce as a hen's teeth.
  • Need more information on consolidating student loans? Here are two websites that may be able to give you more of what you need.

Would you believe there’s another one called the “Public Student Loan Option”? The Obama-Biden (the odd couple but what a nice odd couple) Plan is to make the student loans more affordable. They will limit the payment to 10% of the income above the basic living allowance.

An example is this. If you earn $30,000 and owe $20,000, the monthly payment would be $115 a month down from the current $228. And after ten years of payment, they will forgive the rest of the loan if you work in public service and twenty years for all the others.

Hope this information I tried to gather up for you along with the deferment and forbearance I explained in the previous page will help you make the best decision that fits your particular situation. I will supply you with the links for the previous page at the end of this page for your convenience. Hopefully we can put this issue behind us and get some student loan debt relief.

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Student Loan Debt Relief Is Needed to Stimulate the Economy
Student loan debt relief has undergone a make-over. It is a change we can believe in for relieving the students of some debt can give a healthy stimulus to the economy. The shift from giving banks the grants to offer loans to students to directly offer them to the students will put money in their hands that could lead to business development, other debt resolutions, mortgage payoffs and the buying power needed for the economic recovery.

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