Setting up an account specifically for your student loan repayment funds can be a great way to compartmentalize your finances, and pay more attention to your budget, specially if you are planning on finding refinance student loans programs. It also ensures that your money is protected from unauthorized changes and that it is held in a non-depositing account. You can also use an online budgeting tool such as Mint.com.
Don’t forget to take advantage of your monthly automatic payment, as these can go a long way toward easing your financial burden. You should also make sure that you’re using a payment plan that’s in line with your plan to pay off your loans over time.
Set up automatic payments
You’ll pay off your student loans using automatic payments and interest-free payment plans. These types of payment plans work well because you can continue making payments on your student loans even while on vacation, sick, or going to school. A good payment plan allows you to prioritize payments, and is less likely to lead to late payments and early loan forgiveness. Make sure you set up a payment schedule that fits your financial situation, and adjust it as necessary.
Know your rights when you’re being held to a different repayment plan Every student loan repayment plan is different. It’s also important to know what is and isn’t allowed, depending on whether you’re being held to a repayment plan that’s higher or lower than your current plan. While all repayment plans are different, there are certain repayment plans that are illegal for you to be on. Keep reading to see what you can and can’t be on and how to get the word out about them.
Disadvantages of low-income repayment plans Students with federal student loans should be on the following plans: Income-driven repayment Plans. The income-driven repayment (IDR) plans are designed to help borrowers who make low to moderate monthly payments by making the income-driven payments smaller each month. The income-based plan works in the following way: If you make the minimum monthly payment on your student loans (as a full-time undergraduate student at least 21-years old), you will pay only 10 percent of your discretionary income on your federal student loans. But if you make the minimum monthly payment on your student loans, you will have a payment that is lower than the 10 percent you would have had if you had never borrowed money to pay for college.
The income-driven repayment (IDR) plans are designed to help borrowers who make low to moderate monthly payments by making the income-driven payments smaller each month. The income-based plan, which you will find in the “Payments” section of the “Student Loan Payments” page, is the lowest income-driven plan you can choose. This plan is similar to the income-driven plans used by other federal student loan borrowers, such as federal subsidized Stafford loans and Parent PLUS loans, except that you do not need to have debt to qualify for this plan and you can choose to pay more or less of your discretionary income into your student loan accounts each month.
How can I pay my student loan debt? If you have federal student loan debt that you have yet to make an income-driven payment on, there are a few different ways to pay it. You can have your loans forgiven and discharged (paid off) if you are no longer financially responsible for your student loans.