Debt Management – Types of Repayment Plans

Delinquency and Default Prevention

When preparing for post graduation expenses, students should keep in mind that the repayment of their student loans is a high priority. Not meeting your loan repayment commitment could lead to negative credit reporting and default. There are a number of preventive measures that a borrower can take to ensure that he or she is not faced with the challenge of delinquent payments and/or defaulted loans. Lenders offer several repayment plans to suit the needs of borrowers. Students should consult with their lender regarding the repayment options available. Some of which include:

Change of Payment Due Date

If a borrower has several loans to maintain or gets paid on dates that do not correspond with loan payment dates, many lenders offer the option of changing the payment due date.

Standard Payment Plan

This plan allows you to make equal payments over the term of the loan. Each payment includes both principal and interest. This loan has the highest initial monthly payment, but results in the lowest total interest paid over the life of the loan.

Graduated Payment Plan

This plan allows for your payments to start out low and increase over time. This plan allows for interest-only payments for the first quarter or third of the total repayment period, followed by increased payments for the remaining term of the loan.

Income-Sensitive Payment Plan

This plan bases loan payments on a percentage of your gross monthly income and the amount borrowed. Repayment terms will vary based on the percentage you request, your income, and the total loan amount.

Extended Payment Plan

Under an extended repayment schedule, you can repay your Federal Consolidation Loan over a 30-year period, on a fixed or graduated payment plan, if you have federal loan totaling in excess of $60,000.


Borrowers who do not qualify for a deferment, may be eligible for a loan forbearance. Forbearance is similar to deferment in that it postpones the monthly loan payment, yet it is only for a short period of time and requires that the borrower either pay the monthly interest due on the loan or allow the interest to capitalize and be added to the principal amount.


Borrowers who are having trouble making their monthly payment may be eligible for a deferment. A deferment allows for the postponement of monthly payments, including both the principal and the interest on the loan. To qualify for a deferment, the borrower must be enrolled at least half-time at a postsecondary school, unemployed, or experiencing financial hardship.

Automatic Draft Payment

Option Borrowers may authorize an automatic draft of their loan payment from their checking or savings account. With this option, the borrower does not have to be concerned with writing checks or mailing payments. With automatic deduction, payments are made on time each month. Some lenders offer an interest rate reduction for automatic draft.

Last updated: 1/23/2013

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