What to Look for in a Student Loan Repayment Plan

If you are an Illinois student entering your college senior year this month, congratulations! With only two semesters left, you are about to embark on the rest of your life. You may already be worried about how you’re going to make student loan payments in 2020. For those with federal student loans, there are several repayment plans. At Benjamin Brand, LLP, we are experienced in handling federal student loan issues and helping clients get back on track with payments fit your budget and your life.

Nearly two-thirds of all college graduates finish school with $30,000 or more in debt. Choosing the right plan for repaying student loans can make the difference between being able to afford the monthly installment and debt that escalates and balloons out of control. Although it may be tempting to choose the plan that gives you the lowest required payments and be done with it, that may not be best for your long-term goals.

The first payment is due six months after you leave school, whether you graduate or not. If you do nothing, you will be placed on a standard repayment plan. This is your student loan amount and interest added together then divided into 120 installments, which is 10 years. For example, if you have $60,000 in loans, the payments will be in the vicinity of $515 per month, depending on the actual interest rate.

If you prefer a different payment option, you should apply 46 to 60 days before the bill is due. If you graduate in May, the first bill is due in November, which means you should plan on addressing the plan options in September. A lot can happen in ten years and you can switch plans as needed. Re-evaluating your needs every few years, or when there is a major life event, such as a wedding or new job, can help you maintain control over your student loan debt.

For federal student loans, there are currently eight repayment plans. However, if you have private loans or you are a parent with PLUS loans, there are not as many options. Typically, you cannot alter payment terms with private loans, unless you default. An attorney with experience in student loan law can help you select the terms that help you pay off your loans and preserve your credit.

We help clients with student loan debt, avoid foreclosure and assist with filing bankruptcy. Our Chicagoland offices in the West Loop area are near loft residences, shopping and professional services near West Jackson Blvd and Morgan Street. Contact us or call 312.853.3100 to learn more about or to schedule an appointment.

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