5 Tips To Choose A Student Loan Repayment Plan Wisely

student loan repayment strategy

It’s always exciting when you graduate from college. It’s about that time when you’re done with one major chapter of life and are about to start a new one. This means you will have lots of new opportunities and endless possibilities for what direction your life could take. However, you will also have lots of new responsibilities that you will need to see to. One of the greatest of these responsibilities is repaying your student loans. The thing about student loan repayment, however, is that it can be rather confusing, and rather intimidating.

In this article, we’re going to try and dispel as much of that confusion as we can. We are going to see how you can make student loan repayment more manageable.

So, how do you do this?

The most important thing here is to take stock of what options you have. Along those lines, there are at least 5 considerations you can make, which can make it much easier to choose a student repayment plan.

  1. Your repayment plan will depend on whether you have federal or private student loans

The type of student loan repayment options you have can vary based on the type of student loan you have. The first thing you should therefore do is find out if you have federal or private student loans or a mixture of the two.

If your student loans are federal, then you have a wide array of repayment plans to choose from. Now, you should know that even if you don’t pick a repayment plan, there is a default repayment plan that you will be enrolled in: the Standard Repayment Plan. This plan gives you up to 10 years to pay back your student loans. You should consider all the student loan repayment plans available to you from the government and choose the one with the most appealing terms for you. Note also that you can switch from one repayment plan to another at any point in the course of the repayment term. You can look for the best essay about government loans from the best writing services to help you understand them more.

Your repayment options get a little more elaborate if you have private student loans. In that case, your lender determines what your options are, and lenders often have several plans for borrowers to choose from. The caveat with private loans is that you don’t get to willfully switch from one repayment plan to another in the midst of the repayment term unless you are seeking some kind of assistance, such as forbearance or deferment.

  1. You must consider how much you can pay on a monthly basis

Before you go for any particular repayment plan, think about how much you can afford to pay. For starters, take stock of expenses related to your necessities, such as your rent, groceries, gas money, and even other debts like your credit card payments. Anything that is necessary and recurring each month should be taken into account. 

Once you know what you absolutely need to spend, deduct it from your minimum income every month after all taxes have been deducted. To get your monthly income you could start by looking at your paystub. Whatever’s left over will determine what you can afford to pay on your student loans every month. 

All this is to help you figure out your financial decision and make a more informed student loan repayment plan choice. If you have a lot of money left over after your necessary expenses, you can contribute more toward your student loan payments, which may mean you get to fully repay your loan earlier. On the other hand, if you don’t have that much money left over, you can go for a plan that requires lower monthly payments.

If you can’t make your monthly payments at all, it is crucial that you contact your lender or loan servicer. If you’re on a government loan, you have the option of applying for an income-driven plan, which limits your monthly payments to a certain percentage of your income, usually no more than 20%. For me, this was the best plan as it fit in with my aim of joining the ranks of dissertation writers

On the other hand, if you have private student loans, a good first step is to contact your lender. Whether you’re on private or federal student loans, forbearance and deferment are always viable options. These temporarily postpone your loans.

The difference between forbearance and deferment is that if you choose to defer payments, they will still accrue interest for the deferment period. If you choose forbearance, no interest is accrued during the period of forbearance.

  1. You should consider the interest you will pay

Speaking of interest, this is another consideration you should make when picking loan repayment plans. All student loans, whether federal or private, come with interest. The amount and type of interest is what will vary from one loan to the next.

Federal student loans always come with fixed interest rates. Private student loans may involve fixed or variable interest rates. Fixed interest rates will stay the same for the entire term of the loan, while variable rates may change multiple times during the term of the loan, depending on various factors. The problem with variable rates is that you can’t be 100% sure of how much you’ll pay in interest, while there’s always the chance that your interest payments will go down. With fixed rates, you’re sure of the amount you’ll pay, but you’re also stuck with one rate. 

Knowing the interest rate is important, as it will help you figure out which repayment plan is best for you. It’s also important because the total amount of interest you pay affects the total cost of the loan, and may unexpectedly increase the amount you have to pay back if it is variable. On the other hand, even if you have a fixed rate, but choose a longer term repayment plan, you could still end up paying more due to the increased term.

  1. Consider your financial goals

You should also consider whether or not your repayment plan aligns with your financial goals. If you’re looking to get out of debt as quickly as you can, then pick a repayment plan that allows you to pay your student loans back as fast as possible. If you’re finding it especially hard to make your monthly payments, or have many other financial priorities, then look for a repayment plan that requires you to make lower monthly payments. Keep in mind, however, that this will mean paying more over the long term.

  1. Consider the pros and cons of the repayment plan

As we’ve already seen, not all repayment plans are the same. There are pros and cons to each. For federal loans, for example, a shorter term means paying less in interest but more in monthly payment plans. A longer term means less in monthly payments but more in interest. The same applies to private student loans.


These tips should help you to wisely choose the right student loan repayment plan for you. As you can see, it boils down to considering how it fits into your financial priorities, and picking it from there. At any rate, what matters at the end of the day is that you do your best. Student loans can be repaid if you’re patient and deliberate about it. Don’t panic.

by Michael Gorman

Michael Gorman is a highly skilled freelance writer and proofreader from the UK who currently at Best Custom Essay, one of the top essay writing services UK that offers essay writing service reviews.