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Have you taken any student loans and wondering which is the best repayment option to phase it out? If you have, you are encouraged to read this piece to the very end as we will provide you with an understanding of repayment options and top tips on navigating student loans.

Student loan is an integral part of higher education, it has enabled countless individuals to achieve their academic aspirations. However, before and after graduation, these people find it hard to go about the repayment process. The common mistake is taking the type of student loan that doesn’t give you enough time or flexibility to pay in relation to your income level.

Types Of Student Loans

There are two main types of student loans. These are:

  • Federal Student Loans and
  • Private Student Loans

Federal Student Loans

Federal student loans are provided by the government and it has great benefits such as fixed interest rates, very flexible repayment plans, and potential forgiveness programs.

Under the federal student loan, there are other sub-categories of loans with their specific benefits and repayment plans. They are PLUS Loans, Direct Subsidized Loans, Direct Unsubsidized Loans, and Perkins Loans.

Private Student Loans

Private student loans are offered by private entities, such as private banks and lending institutions. They have totally different terms and conditions as well as benefits and repayment options.

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Some of the benefits of private student loans are; no prepayment penalty while there is a prepayment penalty on any other private loan and also, and interest is tax-deductible.

As we always encourage students to go for federal student loans, we will undertake the repayment plans for these types of loans.

The Standard Repayment Plan

The standard repayment plan is the basic repayment option that comes with federal student loans. It is a fixed monthly payment over a period of 10 years. While this option ensures that your loan is paid in a reasonable time frame, it may result in higher monthly payments compared to other repayment plans.

Despite the higher monthly payment it comes with, it can save borrowers from incurring additional interest over time. This plan is available for all borrowers who want to pay faster in a structured way.

Income-Driven Repayment Plan

This is a repayment plan that has much flexibility considering your income and family size. It has 4 main plans, which are: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). These plans typically require you to pay a percentage of your discretionary income towards loan repayment.

In simpler terms, you pay the required percentage of the loan after paying taxes and deducting all costs of living from your salary. So let’s say, your monthly income is $1000, and your tax and all cost of living takes $600, you are paying the repayment percentage of only $400.

However, each Income-Driven Repayment plan has its own eligibility criteria, payment calculation method, and forgiveness provisions. These plans can be particularly beneficial if you anticipate lower income or have a significant amount of student loan debt. And it is eligible for those who can’t afford their current payment plan and want to avoid student loan default.

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Graduated Repayment Plan

This repayment accommodates borrowers who anticipate an increase in salary or increasing income level after graduation. Under this plan, the borrower makes lower initial monthly payments but it gradually increases over time.

The initial lower payment last for two years and then it increases after every two years until the loan is fully paid in 10 years timeframe. This helps borrowers with a steady increase in income after the first two years.

Loan Forgiveness Programs

These programs give you the chance to have all or half of your loan canceled after meeting specific requirements. There are two primary loan forgiveness programs. They are:

  • Public Service Loan Forgiveness

This program caters to those working in qualified public service jobs who have made at least 120 qualifying payments while employed full-time by a qualified employer.

In other words, you must make 120 payments under your repayment plan after having been employed full-time in a public service job.

  • Teacher Loan Forgiveness

Just as the name implies, this program caters to educators working in low-income schools. To be eligible, you must be teaching for 5 consecutive years in a qualifying school.

Repayment Strategies and Tips

Managing student loans requires proactive strategies and careful financial planning. The following tips will help you navigate repayment effectively.

  • Budgeting and managing finances

Create a budget to allocate funds for loan payments and prioritize essential expenses. Track your spending and consider making adjustments to save money.

  • Making Extra Payments and Paying Off Loans
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If possible, make additional payments towards your loans. Even small extra payments can significantly reduce the overall interest paid and shorten the repayment term.

  • Communicate With Loan Servicers

Maintain regular communication with your loan servicers to stay updated on any changes or options available. They can guide you, answer questions, and assist you in choosing the best repayment plan for your situation.

  • Dealing with Financial Hardship

If you encounter financial hardship or become unable to pay your loan, contact your loan servicer. They may offer temporary solutions such as deferment, forbearance, or income-driven repayment adjustments to accommodate your circumstances.

  • Stay Informed

Stay updated on changes to student loan policies, repayment options, and any new forgiveness programs. Subscribe to official student loan websites and reputable financial resources to receive the latest information.


Navigating student loans and understanding repayment options are vital for the successful management of your debt. Get familiar with the type of loans and their repayment options available, evaluate the standard and the income-driven repayment plans depending on your income level without forgetting to implement effective repayment strategies as well as explore the potential loan forgiveness programs.

With this, you can work effectively towards clearing your student loans and have a debt-free future, and be financially stable

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