Various Details of a Student Loan

Presented below are some frequently asked questions regarding a number of student loan topics:

What is Covered?

The Cost of Attendance (COA) to a school – tuition and fees, room, board, books, supplies, equipment, transportation, dependent child care and personal expenses – are usually covered by a student loan. Some loans cover costs for renting or purchasing a computer or studying for the Bar Exam.

What are Payment Periods?

The payment periods depend upon the amount and type of the loan. Some repayment begins immediately while the student is still in school. Most repayment schedules will begin about six to nine months after graduation.

Some small loans can be repaid in a couple of years. The average loan must be repaid within 10 years. With consolidation, some loans can be extended up to 30 years.

What are Monthly Payment Schedules?

There are a variety of different monthly payment schedules that can be arranged for student loans. A typical monthly payment will run between $100 to $300. It is wise to use a loan calculator to estimate monthly payments to compare it to your expected monthly salary. Usually, there is no penalty for prepayment of student loans.

Here is a listing of the most common repayment plans:

+ Consolidation – Combines all loans into a single monthly payment and interest rate, usually monthly payments are reduced and the schedule is extended.

+ Extended – When people struggle to meet original payment plans, they can apply for an extended plan that provides lower payments for a longer period of time.

+ Graduated – This payment schedule figures that most graduates will have lower paychecks at first. It has lower payments at the beginning and higher payments at the end.

+ Income Sensitive – Repayment is tied even more closely to income earned after graduation for this plan. This is a hedge against employment in jobs that don’t pay very well or against unemployment.

+ Standard – Same monthly payment amount.

One of these payment schedules is not necessarily “better” than the other. It all depends on the specific needs of the student / borrower.