Are you an aspiring student who wants to pursue higher studies but has a problem regarding financial matters? Fortunately you have an opportunity to obtain educational loans that can come as a relief to your wallet. But before that you should have a clear idea about the repayment options which otherwise can create unwanted issues that might lead to immense confusion.
What Is Student Loan?
Student loans are disbursed by well known banks and financial institutions for the benefit of the students for whom it is almost impossible to pay the amount as a whole or by themselves. The provision of repayment depends on the terms and conditions formulated by the lending institution and the student has to pay it back following the same. The interest rates are decided by the government and the banks have no way to deny that.
What Is Repayment?
Once you are through with the course for which you have taken the loan, you need to be aware of the repayment. If you are a post graduate student you can take a period of 6 months before you start paying the installments back and the conditions differ from individual to individual. There are several repayment options available and sometimes the students may also ask the lender to change or modify it as per his/her convenience.
Available Repayment Options
Standard Repayment Option
The tenure for the repayment is scheduled to be 10 years and it is considered to be one of the most common options offered by the lending bank or financial institutions. The interest rate is quite low, which means your total payments are much lower but that makes the monthly payments higher than usual.
Graduated Repayment Options
If you are choosing such type of a repayment option you can start out low with your payments. However, you can increase the amount during the tenure of repayment, at an interval of two years. If you are someone who falls under a low income group even after graduation, you can go for this scheme and end up striking a better deal.
Extended Repayment Option
As the name suggests, you can extend your repayment tenure till 25 years, which highly depends on the loan amount. Interestingly you need to have an outstanding balance of a certain amount to be eligible for the loan to apply for. The other terms and conditions remain the same. People usually combine the graduated plan with the extended plan in order to lower the payment further and enjoy financial benefits.
If your financial conditions are not that stable you may also opt for some other repayment options which are especially designed for high debts. You need to produce proper documents for availing the loan and thus get several benefits.
ICRP Or Income Contingent Repayment Option
You might not get an ICRP option for all student loans except from government institutions, but if you are eligible for the same, you can be on a gainer side. The payments are usually lower, however, if that goes below your accrued interest monthly, with passing time you may find the principal rising higher. You must pay back the entire amount by 25 years otherwise it will be cancelled.
IBRP Or Income Based Repayment Option
It is quite same as the ICRP but have better and flexible payment options for the borrower. You can find the payments lesser than the accrued interest and sometimes even much lesser than ISRP or ICRP.
ISRP Or Income Sensitive Repayment Option
You are eligible for such a repayment option only if you have a loan from a government institute. To repay the amount back the lender would see your annual income, total amount and the family size as well. The payments should cover the total interest and you must complete the repayment within the tenure of 10 years.
This refers to the consolidation of one or more loan and combining it into one. The repayment options will be decided by the lending institution and you need to abide by the terms and conditions strictly.
Forbearance Or Loan Deferment
Sometimes it may so happen that you have taken a huge amount and hence the repayment amounts are more than you have imagined. You at this case can postpone the loan repayments on a temporary basis, or even appeal to reduce the installment amounts from the lending institutions. When you are not paying the EMIs’ you can call these tenure of months as the “deferment period” and the interests are being paid by the government during this time. They are also termed as forbearance period because the amount grows on. Later on when you recover your financial conditions you may return back to your previous terms of payments.