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What Student Loan Plan Am I On? A Guide For Students

what student loan plan am i on
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As a student, you may have taken out student loans to pay for your education. However, with different types of student loan plans available, the next question is: “What student loan plan am I on”. 

Student loans can be a complex financial tool and it’s important to understand the repayment plan you are on to help you best manage your finances. Usually, figuring this out doesn’t always come easy but it’s a very important step towards financial clarity especially for a student who is looking to get one.

This article will help you with all you need to understand which student loan plan you are on. Also, we will discuss the different types of student loan plans available and the methods of identifying your plan so you can address the questions you have and gain financial clarity.

Thus, it can be confusing to figure out which one you’re on. This guide will help you understand the different types of student loan plans and how to determine which one you’re on.

Table of contents

How do I know what my student loan payments will be?

You’d agree that figuring out your student loan payments is not usually the most exciting topic, but it’s undoubtedly an important one to explore. I mean, these loans helped or are helping you get through school to earn that awesome degree, but now, you need to sit, relax, and find out what payment plan you are on.

There are ways to find out, but first, you need to understand that there are different plans available with their set terms and conditions. So, how do you find out what student loan plan you are on?

First, you will need to check your loan server’s website. This is the company in charge of your loan. They are the ones who send out your billing statements and handle all your payments. So, when you check this website, you’ll find a breakdown of the details of your loan, in addition to your current payment amount.

Now, there are cases when people are unsure who their loan services are. In this case, you can find out on the Federal Student Aid website. There you will find a helpful tool that can allow you to search and find out who your loan service is based on your personal information.

Read: What Happens if You Don’t Pay Your Student Loans Back?

What Student Loan Plan Am I On?

Below are the different types of student loan plans available:

Federal Student Loan Plans

There are three types of federal student loan plans: Standard Repayment, Graduated Repayment, and Income-Driven Repayment.

Standard Repayment Plan

The standard repayment plan is the default plan for federal student loans. It allows you to make equal payments over 10 years. If you have not chosen a different plan, you are likely on the standard repayment plan.

Graduated Repayment Plan

The graduated repayment plan starts with lower payments that gradually increase over 10 years. This plan is ideal for students who expect their income to increase over time.

See Step-by-Step Guide To Apply For Federal Student Loans

Income-Driven Repayment Plan

The income-driven repayment plan allows you to make payments based on your income and family size.

There are four types of income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). If you are on an income-driven repayment plan, it’s important to recertify your income and family size every year.

Also, read: What Happens to Your Student Loans When You Die?    

Federal Direct Subsidized Loans

This type of loan is for undergraduate students who demonstrate financial need. The government pays the interest on the loan while the student is in school, during the six-month grace period after graduation, and periods of deferment. This loan has a fixed interest rate and is limited to a specific amount each year.

If you have been awarded a Federal Direct Subsidized Loan, you can check your loan status by logging into the National Student Loan Data System (NSLDS) website. This website will provide you with all the details of your loan, including the amount disbursed, the interest rate, and the repayment plan.

Federal Direct Unsubsidized Loans

This loan is available to both undergraduate and graduate students and does not require a demonstration of financial need. Unlike the subsidized loan, the government does not pay the interest on the loan.

The interest accrues while the student is in school and during other periods of deferment. The loan has a fixed interest rate and is limited to a specific amount each year.

If you have been awarded a Federal Direct Unsubsidized Loan, you can check your loan status by logging into the NSLDS website. This website will provide you with all the details of your loan, including the amount disbursed, the interest rate, and the repayment plan.

Also, see: Does A Student Loan Count As Income In The UK?

Federal Perkins Loans

This loan is for undergraduate and graduate students who demonstrate exceptional financial need.

The government pays the interest on the loan while the student is in school, during the nine-month grace period after graduation, and periods of deferment. This loan has a fixed interest rate and is limited to a specific amount each year.

If you have been awarded a Federal Perkins Loan, you can check your loan status by contacting the financial aid office at your school.

Federal Direct PLUS Loans

This loan is available to graduate students and parents of undergraduate students. The loan does not require a demonstration of financial need, and the borrower’s credit history is taken into account when determining eligibility. The interest rate is fixed, and the loan has a specific limit.

If you have been awarded a Federal Direct PLUS Loan, you can check your loan status by logging into the NSLDS website. This website will provide you with all the details of your loan, including the amount disbursed, the interest rate, and the repayment plan.

Private Student Loan Plans

Private student loans are not issued by the government, and therefore, do not have as many repayment options as federal student loans. However, some lenders offer different repayment plans.

Fixed Repayment Plan

The fixed repayment plan allows you to make equal payments over some time, usually 10 years.

Interest-Only Repayment Plan

The interest-only repayment plan allows you to pay only the interest on your loan for some time, usually 4 years. After that, you will need to make both interest and principal payments.

Deferred Repayment Plan

The deferred repayment plan allows you to delay making payments on your loan while you’re in school. However, interest will still accrue during this time, and you will need to repay the loan with interest after you graduate.

Also, read: What To Do When Student Loan Account Is Closed Due To Transfer

Determining Your Student Loan Plan

To determine which student loan plan you’re on, you can check your loan servicer’s website or call them directly. You can also check the National Student Loan Data System (NSLDS) website, which provides information on all of your federal student loans.

In conclusion, understanding your student loan plan is critical in managing your finances. By knowing the type of loan you have, you can plan for the future and manage your debt. 

Remember to keep track of your loan status by logging into the NSLDS website or contacting your school’s financial aid office. With this guide, you can confidently determine which student loan plan you are on and what it means for your financial future.

FAQS

What is a Plan 1 or Plan 2 student loan?

Plan 1 and Plan 2 student loans are the two main types of student loans available in the UK. Plan 1 loans were available to students who started their course before September 2012, while Plan 2 loans were available to students who started their course on or after September 2012.

The main difference between Plan 1 and Plan 2 loans is the interest rate. Plan 1 loans have a lower interest rate than Plan 2 loans. Plan 1 loans are also written off after 30 years, while Plan 2 loans are written off after 30 years if you do not repay them in full.

What is a Plan 2 student loan?

Plan 2 student loans are available to students who started their course on or after September 2012. They have a higher interest rate than Plan 1 loans, and they are not written off until you repay them in full or after 30 years, whichever comes first.

Plan 2 loans are repaid through the income-contingent repayment scheme. This means that you only repay your loan if you earn over a certain amount. The amount you repay is calculated as a percentage of your income over the repayment threshold.

Who has a Plan 4 student loan?

Plan 4 student loans are available to Scottish students who started their course on or after 1 September 1998. They have the same repayment terms as Plan 2 loans, but they have a lower interest rate.

What is the best loan option for students?

The best loan option for students depends on their circumstances. If you can start your course before September 2012, then a Plan 1 loan may be the best option for you, as it has a lower interest rate and is written off after 30 years.

If you are unable to start your course before September 2012, then a Plan 2 loan may be the best option for you. However, it is important to be aware of the higher interest rate and the fact that the loan is not written off until you repay it in full or after 30 years.

Scottish students may also want to consider a Plan 4 loan, as it has a lower interest rate than a Plan 2 loan.

Ultimately, the best way to decide which loan option is right for you is to speak to a student finance advisor. They can help you to compare the different loan options and to choose the one that is best for your circumstances.

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References

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