If you have student loans that scare you, you are not alone. Many people are turning to income-driven repayment plans as a way to change the way they pay back their loans. Loan programs and repayment programs can help you pay less, allowing you to focus on paying off other bills, including a mortgage.
Fortunately for many people, the federal government offers income-driven repayment plans. These plans lower your monthly bill to allow you to pay what you can based on the size of your family and your income level.
When Should You Consider this Plan?
You should consider an income-driven repayment plan if you are not able to afford your current payment. You should also consider the plan if you will qualify for loan forgiveness in the future or if you have a lot of debt and a low income at the moment.
Keep in mind that there are several plans available. Each one has different types of advantages you should consider.
Pay As You Earn
This method is great if you are married and have two incomes bringing money in. It is also a good choice for those with graduate loans or those who currently have a low earning potential. The amount you will pay each month is based on a percentage of your discretionary income.
Revised Pay As You Earn
If you are not married, have a high earning potential, and no graduate loans, you might consider this option. This type of loan repayment program will focus on having you pay back a portion of your income based on a percentage of your discretionary income.
If you do not qualify for a Pay As You Earn model of repayment, this is a great choice. Again, this program requires that you pay a percentage of your discretionary income each month.
This style of repayment allows you to pay back parent PLUS loans, and it can provide some reduction in payments. This kind of plan may call for higher payments than others on this list, but it does work better for parents who are paying back loans for their children.
What Should You Do Next?
Your next step is to speak with a loan professional to learn more about the loan programs available to you. You might be surprised to learn that understands your financial situation and allows you to focus on paying back your student loans while also paying on a mortgage or other bill that you want to pare down.
For more information on ways you can pay back your loan, speak to a mortgage lender today.Share