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3 Payment options to repay your student loans

Sometimes, it can be tough to repay your student loans. Perhaps you have stumbled on hard times and are struggling to meet the terms of your Standard Repayment Plan.

However, there is no need to simply default on the loan. Fortunately, you do have other options.

If you have been having trouble repaying your student loans, these alternatives may be worth a look:

Graduated Repayment Plan

The advantage of the Graduated Repayment Plan is your payments start low and are scheduled to increase gradually, usually every two years.

Depending on the type of loan, the repayment period is up to 10 years and will not ever be greater than three times any payment throughout the life of the loan.

The graduated repayment plan is best for individuals who expect their income to increase in the future.  This may be ideal for those just entering the workforce.

You will pay more in interest costs under this plan than you would under a Standard Repayment Plan.

Extended Repayment Plan

The Extended Repayment Plan extends the payment terms of your loan beyond the traditional standard repayment of 10 years.

Payments may be extended up to 25 years, thus lowering the monthly payment amount on the loan.

With this plan, payments may be fixed or may change over time. And as with the Graduated Repayment Plan, you will pay more in interest costs with this type of plan than you would under a 10-year standard plan.

Income-Based Repayment Plan

The Income-Based Repayment Plan allows you to make student loan payments based on current income. A partial financial hardship is required to be eligible for this plan.

Maximum monthly payments are limited to 15 percent of your discretionary income. In addition, any remaining balance is forgiven after 25 years.

As with the other plans on this list, you will pay more in interest costs under the income-based plan than you would under a standard plan. Still, if current payments are relatively high in relationship to your income, this plan may work for you.

In addition to these alternatives, there are many more that may fit your needs. Visit the Federal Student Aid website to explore all payment options and utilize the repayment estimator to determine which plan works best for you.

Kemberley Washington is a certified public accountant and a professor at Dillard University in New Orleans.  She writes a personal finance blog at  Follow her on Twitter: @kemwashcpa.

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