Financial Literacy for Students: Student Loans

The three main Fixed Payment Repayment Plans include the Standard Repayment Plan, the Graduated Repayment Plan, and the Extended Repayment Plan. These plans base your monthly payment on how much you owe, your interest rate, and a fixed time period of repayment.

When you leave school (with federal debt), you are automatically enrolled into the Standard Repayment Plan unless you pick a different repayment plan.

From: Federal Student Aid.gov

There are many different types of Student Loans, which can function and be eligible for for different types of plans, independently of each other. Your student loan package may contain various types of loans. This is not an extensive list, just the most common.

Federal Loans:

• Direct Subsidized Loans
  • Available to undergraduate students with financial need
  • The Dept. of Education pays the interest while you are in school
• Direct Unsubsidized Loans
  • Available to undergraduate and graduate students, no requirement to demonstrate financial need
  • Student is responsible for interest that accrues while in school
• Direct PLUS Loans (for Parents)
  • Loans that your parents may have taken out to help cover the cost of your education that they are responsible for paying

• For more information on Federal Loans, visit StudentAid.gov

Private Loans:

• You may have loans through private organizations, like banks, who will have their own terms for repayment

Grants: Funds that were awarded to you, and do not need to be paid back

• Tuition Assistance Program (TAP) Grant is a common grant awarded to student in New York State

Scholarships: Funds that were gifted to you, and do not need to be payed back

An Income-Driven Repayment (IDR) Plan bases your monthly student loan payment amount on your income and family size. For some, payments can be as low as $0 per month. You will also need to recertify each year to confirm your income and family size.

Keep in mind, whenever you make lower payments or extend your repayment period, you will likely pay more interest over time.

From: Federal Student Aid.gov

Student Loan Forgiveness is a fluctuating topic. There are various ways to qualify, depending upon your job after college, if your school closed or misled you, or other situations.

For more information, please visit the Student Loan Forgiveness page of the Federal Student Aid website.

If you have multiple student loans, you may be able to combine them into one loan with a fixed interest rate based on the average rates of the loans being consolidated. A Direct Consolidation Loan allows you to consolidate multiple federal student loans into one at no cost to you. Once the consolidation is complete, you will have a single monthly payment on the new loan instead of multiple monthly payments. 

For more information, please visit the Loan Consolidation page of the Federal Student Aid website.