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Extended Repayment: Why Does It Cost More Money?
Hi,
I wanted to chat with you about something that needs to be clarified: extended student loan repayment plans. Understanding these plans can be crucial as you research and buy a home.
Let's break this down.
Extended repayment plans may seem like a good deal initially because they start with lower payments. But there's a catch - you pay more in the long run.
There are two main types of these plans:
⚡️Extended Graduated Plans: Your monthly payment increases every two years, and the repayment period extends beyond ten years.
⚡️Graduated Plans: You pay the same monthly amount, but the repayment period is over ten years.
These options result in lower payments than the standard 10-year plan, which everyone is automatically put on. But here's the thing: if your interest rate is over 5%, stretching out your loan with these extended plans is like turning your student loan into a long-term mortgage. You'll pay more over time; these plans don't forgive any interest.
According to the US Department of Education, nearly 2 million Americans are on these extended plans. If you're struggling to afford your payments, an income-driven plan, such as PAYE, REPAYE, or IBR, may be a better option. You can see which repayment plan is best for you on the recommendations tab with LoanSense.
The great thing about income-driven plans is that you can receive government interest subsidies and forgiveness over time. Yes, you'll need to file paperwork every year, but it's worth avoiding the thousands of extra dollars you might end up paying on an extended plan.
Remember, it's all about understanding your options and making informed decisions. Don't hesitate to ask if you have any questions.
I wanted to chat with you about something that needs to be clarified: extended student loan repayment plans. Understanding these plans can be crucial as you research and buy a home.
Let's break this down.
Extended repayment plans may seem like a good deal initially because they start with lower payments. But there's a catch - you pay more in the long run.
There are two main types of these plans:
⚡️Extended Graduated Plans: Your monthly payment increases every two years, and the repayment period extends beyond ten years.
⚡️Graduated Plans: You pay the same monthly amount, but the repayment period is over ten years.
These options result in lower payments than the standard 10-year plan, which everyone is automatically put on. But here's the thing: if your interest rate is over 5%, stretching out your loan with these extended plans is like turning your student loan into a long-term mortgage. You'll pay more over time; these plans don't forgive any interest.
According to the US Department of Education, nearly 2 million Americans are on these extended plans. If you're struggling to afford your payments, an income-driven plan, such as PAYE, REPAYE, or IBR, may be a better option. You can see which repayment plan is best for you on the recommendations tab with LoanSense.
The great thing about income-driven plans is that you can receive government interest subsidies and forgiveness over time. Yes, you'll need to file paperwork every year, but it's worth avoiding the thousands of extra dollars you might end up paying on an extended plan.
Remember, it's all about understanding your options and making informed decisions. Don't hesitate to ask if you have any questions.