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Debt Counseling Assistance :: Loan Payment Formula
Loan Payment Formula:
The Formula Used to Calculate Your Student Loan Payment
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When calculating your student loan payment formula, federal officials and lenders often base payments on income and the total amount borrowed.
While large student loans may provide students with access to an education, but they also add the burden of a heavy and often cumbersome debt load.
The average student debt load is on the rise, with graduates in the early nineties carrying around $13,000 in graduate debt.
Today, that average debt load has increased to close to $20,000 and over 65% of students are taking out student debt. With today's rising interest rates, those same loans could be debilitating for many new graduates trying to get on their feet.
If you think you may be in danger of defaulting on your student loans, you can ask to have your loan payment formula revisited or recalculated. To find out more about your options, keep reading.
Extended Repayment Term
The repayment terms for many federal student loans, like the PLUS parental loan and the Stafford Federal Loan Program, can be extended for up to 30 years – dramatically decreasing your monthly loan payment commitments.
With this formula, your overall interest and cost of borrowing will increase, but you'll free up more money on a month-to-month basis.
Graduate Repayment Formula
This loan repayment formula is a great option for new graduates. Basically, your loan payment will start off small and then gradually increase every two years along with, hopefully, your income.
Apply for Deferral
Applying for a deferral could be a great way to ward off defaulting on your loans. If you are unable to find a job, have run into financial hardship or are enrolled in a recognized post secondary education program, then your lender must grant you a deferral.
If you have a Stafford Federal Loan, you can get your interest paid by the government throughout your deferral period.
Apply for Forbearance
Forbearance is a procedure that either reduces payments or postpones them. Essentially, your lender uses an income and loan payment formula to determine your level of financial hardship.
Also, deferrals can only be used for a period of three years over the course of the loan. Meanwhile, forbearance payments are considered short term and should only last a year for each forbearance.
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Debt-Counseling-Assistance.com :: Loan Payment Formula