Common Repayment Plans

If you would like cheap student loan consolidation to make your monthly payments more affordable, you have several repayment plans from which to choose. We've detailed three of the most common student loan repayment methods below.

Cheap Student Loan Consolidation Option #1: Extended Repayment

Extended repayment plans do exactly what their name implies: lengthen the repayment period of your student loans. This in turn makes your monthly payments more affordable. Remember that student loan consolidation is provided by private lenders, so no two lenders will have identical repayment options. Most lenders, however, allow consolidation customers to make payments as low as interest-only for a limited period of time and/or extend the term of the loan by up to 25 years in some cases. To qualify for an extended repayment plan, you will likely need to have private loans, parent PLUS loans, or Stafford loans with balances in excess of $30,000.

Option #2: Graduated Repayment

Most cheap student loan consolidation companies also allow graduated repayment schedules, which involve slowly increasing monthly payments. Typically, for the first few years of the consolidation loan, Stafford, private, and PLUS loan borrowers make relatively small payments. After the initial term expires, borrowers then make traditional payments of principal and interest for the remainder of the loan's term. Always keep in mind that graduated repayment plans will minimize your student loan expenses in the short run, but your overall expenses will likely be greater.

Option #3: Income-Tailored Repayment

Not all cheap student loan consolidation services offer income-sensitive repayment, so make sure you ask your lender first if you are interested. Most borrowers of PLUS and federal Stafford loans can qualify for income-tailored payments. Generally, an income-sensitive repayment plan requires that you pay at least the interest on your consolidation loan every month. Borrowers have the freedom to decide the amount of their monthly payment after that. Usually, lenders require the payment to be between 4%-25% of the borrower's gross monthly income. Some lenders may require borrowers to re-apply for income-sensitive repayment programs every year. As with most student loan consolidation plans, there is usually no penalty for early repayment. Make sure you also look through all the other perks of cheap student loan consolidation