Student Loans Payment Plan

8 min read

How to make money while studying

There are many ways to earn money while studying. You can get a part time job, freelance work, become a tutor, sell some items online, or even start your own business. If you are looking to make money while studying then these options might interest you.

Make extra cash as a student tutor

If you’ve got a spare bedroom, then tutoring students at home is another way to find side income as a student. A service like TutorVista connects tutors with people willing to pay them to teach.

Become a freelance writer

You may have thought about becoming a professional writer later in life, but you could do it now. Freelance writing offers good earning potential (it can take about six months to save up enough to cover your student loan) and the best thing about it is that it does not really matter where you live. Learn how to write effectively using the 5 step formula taught in my course.

Sell products online

Another great idea would be to set up an online store that sells any type of product you want, right from clothes to electronic gadgets. 5. Start a blog

A blog doesn’t need to be expensive. There are free blogging platforms such as WordPress and Tumblr while paid ones offer additional features. In fact, you don’t even need a web host to create a blog; you can use Google Docs! However, if you’re serious about blogging, then consider buying a domain name and purchasing a web hosting package.

Work part-time

You should think about working part-time or in addition to your studies. Part-time jobs let you build experience relevant to the career you want, plus they give you the opportunity to save money.

Find a scholarship

Scholarships aren’t just for established higher education students. Many universities offer scholarships specifically to undergraduate students who demonstrate financial need. Check your local university website. You may be eligible for grants, scholarships or both.

Student Loans Payment Plan

What is interest?

Interest is how much you pay each month towards your loan. Interest rates vary depending on where you borrow money, what kind of loan you get (e.g. private student loans vs federal student loans), and how long you have left until you make your payment. In general, interest payments add onto the principle balance of your loan, meaning that if you’re paying $100/month toward your loan, at the end of the year you will owe $150 instead of only $100.

Interest is calculated daily using both the current month’s payment amount and the remaining principal on the loan. If you don’t have enough remaining principal to cover the entire monthly payment, then the lender uses whatever is left over after making the monthly payment. Your lender may call this “unpaid principal.”

How do I calculate my interest rate?

The interest rate on student loans is based on the U.S. Treasury Bill Rate (the rate banks charge each other) plus some additional adjustments. These adjustments change over time, but they’re currently around 2%. So if you borrowed $10,000 at 6% interest, you’d pay about $120 per month in interest.

When you receive your monthly statement, look under the heading “Principal & Interest.” You should find two numbers—one for interest, and one for the total due. Just divide the second number (interest + unpaid principal) by the first (principal). That’s your percentage-per-month interest rate.

Is interest included in my monthly payment?

Some types of loans have a fixed interest rate; this means that no matter how much you pay toward the debt each month, the interest rate stays the same. Typically, these are federal student loans and subsidized Stafford loans (for students with low incomes who qualify for government aid). Private student loan lenders also use a fixed interest rate, sometimes called a cap, that applies to the whole loan. However, many private student loan companies allow borrowers to select a variable-rate plan, which is similar to credit cards. Variable interest plans adjust the interest rate according to market conditions, so you’ll never pay more than the interest rate on any given day. And unlike a credit card, the rate doesn’t increase when you carry a high balance.

Can I reduce my interest rate?

Yes! Most federal student loan programs offer refinancing options. You might have heard people talk about “paying off their loans early,” and that’s exactly what they mean. Refinancing lets you take out a different type of loan with a lower interest rate. The catch? A lot of times, you’ll need to put down a larger sum of money upfront, so you won’t get a refund of the original amount you paid. But once you’ve paid off your original loan, you’ll have saved thousands of dollars in interest, and you can apply those savings to future purchases.

Do I have to refinance in order to lower my interest rate?

No. There are several ways to reduce interest on student loans without refinancing, including taking advantage of federal deferment or forbearance programs.

Federal Deferments and Forbearances

An undergraduate degree qualifies you for three different kinds of deferments: graduate school, active duty service, and post-completion employment. Graduate school, active duty service and post-completion employments are called “academic deferments.”

Student Loans Payment Plan

What is Student Loan Repayment?

The FAFSA (Free Application for Federal Student Aid) is a standard type of financial aid application for students who want to receive federal financial assistance. The FAFSA determines eligibility for government grants and loans. If eligible, students will receive funding through student loan programs administered by the US Department of Education. Students may apply for these direct federal loans at any time throughout their college career. In addition, they should apply early enough to ensure the best possible award amount.

How much money do I need to borrow?

You’ll have to decide how much you’d like to borrow based on your expected costs at school and how you plan to pay back the loan after graduation. Your total estimated cost will depend on factors including tuition, room and board, books, fees, transportation, and personal expenses. You’ll need to calculate your monthly payments using online tools provided by the government, private lenders, and banks. Once you’ve determined what you think you can afford, use our Loan Calculator to determine how much you could expect to borrow.

Can I get a grant instead of borrowing?

If you’re willing to sacrifice some of your future earnings, you might be able to get a grant instead of taking out a loan. Grants provide money directly to students without requiring them to repay anything. There are two types of grants provided by the U.S. Government — Pell grants and Supplemental Educational Opportunity Grants (SEOG). Both types require you to meet certain requirements to qualify. However, only cash-based programs are guaranteed; scholarships generally don’t guarantee any specific interest rate.

What are my repayment options?

You can choose to make either fixed or graduated repayment plans. Fixed repayment plans set a payment amount for the entire length of the loan. Graduated repayment plans offer different payment amounts over varying lengths of time. You can spread your payments out over several years if you prefer.

Do I have to start repaying my loan right away?

Not necessarily. Because loans aren’t always tied to a specific term, borrowers can defer making payments until they no longer need the funds. Before you start your repayment plan, make sure you understand how long you will have access to your funds before you need to begin paying back your loans. Also, check with your lender about applicable loan forgiveness programs.

Will I be able to refinance my loan?

Yes, you can refinance your student loans at any time. Lenders will often adjust your interest rates and terms based on your credit history, income, and other criteria. You may even be able to switch between private and federal loans at the same time.

Who pays taxes on my loan?

When you take out a loan, the federal government collects the interest and principle payments you make each month. However, it’s not actually yours. Instead, the government uses those profits to fund its operations. Your tax returns reflect the interest payments you make to the government. When you complete a student loan payment, you’ll deduct any unpaid principal balance. But keep in mind that the IRS won’t let you deduct your loan interest twice!

Student Loans Payment Plan

This video was created as part of the 2014-2015 California State University (CSU) Online Video Challenge sponsored by CSU Office of Communications & Marketing Services, The CSU Student Financial Assistance Program, and the Federal Supplemental Educational Opportunity Grant (FSEOG) program.

Student Loans Payment Plan

Student loans are a type of loan that student borrows from financial institutions to finance their education at colleges, universities, vocational schools, trade schools, and graduate school. Students generally take out these types of loans to cover tuition, books, and other costs associated with attending college. At present, approximately $1 trillion dollars worth of student debt is owed by students in the United States. Due to student loans being relatively unsecure debts for the borrower, they have to pay back a certain amount of money each month until they have repaid the entire total sum.

Income Based Repayment (IBR) plan

The income-based repayment plan is the first option for borrowers who do not qualify for the standard payment plan for their federal student loans. Under this plan, the monthly payments are based on what percentage of your discretionary income you choose to use towards your loan repayment. The higher your income, the lower the percentage you pay. If you make less than the median household income, you qualify for 100% subsidized payments. However, if you make over the median income level, there is no limit on how much you pay. The maximum length of time for IBR is ten years, though some people extend their repayment period up to twenty years. In order to receive an extension under the income-based repayment program, you need to provide proof showing that your circumstances have changed in a way that would justify extending your repayment term. You may also want to consider consolidating your student loans if they are currently spread across different lenders.

Pay As You Earn (PAYE)

Pay As You Earn is the second option for those who don’t qualify for either the standard payment plan or the income-based repayment plan. Under PAYE, you calculate and then submit a fixed monthly payment that covers the interest plus a fixed portion of the principal balance of your loan. You will always have to repay the full principle amount before you even begin repaying any additional amounts. The longer you delay making the payment, the more interest you will accrue on your outstanding balance. When making payments under PAYE, you should never miss a single payment and should keep track of your remaining unpaid balance. Your lender will send you an annual statement detailing the current status of your loans and how much you owe. After five years, your loan becomes fully forgiven.

Public Service Loan Forgiveness (PSLF)

If you are enrolled in public service jobs working in nonprofit organizations or government institutions, you could potentially qualify for a forgiveness program. Most notably, the Public Service Loan Forgives Program forgives any remaining balance on qualifying student loans after 10 years of fulltime employment in a qualifying job. Qualifying jobs must consist of work in a field related to the student’s major area of study. Eligible occupations include law enforcement officers, firefighters, EMTs, paramedics, doctors, lawyers, teachers, social workers, nurses, paraeducators, and many others. To qualify for the PSLF program, you must remain employed in your career field for 10 years, complete 120 on-the-job hours per year, and demonstrate satisfactory progress toward completion of your degree or certificate. You must also be enrolled in an eligible institution while working toward completing your degree or certificate.

Private Alternative Loan Forgiveness Programs

Private alternative loan forgiveness programs are offered by private companies that specialize in helping people manage their student debt. These loan forgiveness programs vary greatly between companies, but may offer incentives like deferments or forbearances if you agree to postpone interest payments for a number of months. Many of these companies also allow borrowers to consolidate their loans into one manageable account, which you would access using a debit card or electronic checkbook. Borrowers often find that paying off their loans early with the help of these services saves them hundreds of dollars in interest charges compared to traditional repayment plans.

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