Sometimes the right loan repayment plan can totally revamp your ability to pay back your student loans and get rid of your student loan debt. Although you are required to select a repayment plan when you initiate repaying your student loan, you may change the repayment plan any time by contacting the borrower or by consolidating multiple student loans.

There are many repayment plans available for federal student loans such as standard plan, extended plan, graduated plan, income-driven plans, income-sensitive plans, and pay-as-you-earn plan. The selection of repayment plan depends on your income, type of loan, and personal preferences.

Graduated Repayment Plan

Graduated Repayment Plan is one of those loan repayment plans that can help you to lower your monthly repayment installments. With graduated repayment plan, you start with paying lower monthly payments that increase on the completion of first two years of the repayment term.

Graduated repayment plan is best for individuals who have low income now, but they expect to earn more with time. The repayment term may extend over 10 to 30 years depending on the principal amount and type of loan.

How does it Work?

Under graduated repayment plan, you start up with low monthly installments that comprise of the interest charged on the loan only. After two years, the monthly installments increase and you switch to standard monthly installments, which comprise of principal amount plus interest. The standard monthly installments continue for the rest of the repayment term.

The monthly installment amount will be equal to the interest or at least 25 percent of the standard payment, whichever is higher, for the first two years of repayment term. After which standard repayment plan starts, under which you cannot pay less than 50 percent or more than 150 percent of the standard monthly installment amount.

The repayment term extends up to 10 years for all federal direct student loans except the Consolidation loans. For Direct and FFEL Consolidation loans, the repayment term may extend up to 30 years.

Eligible Loans for Graduated Repayment Plan

The following loans are eligible for graduated repayment plan:

  • FFEL PLUS loans
  • FFEL and Direct consolidation loans
  • Direct PLUS loans
  • All federal Stafford subsidized and unsubsidized loans
  • All direct subsidized and unsubsidized loans

Why You Should Opt for Graduated Repayment Plan?

There are several benefits offered by the Graduated repayment plan. It is best suited for fresh graduates who start with a low income and start earning more over years. This repayment plan offers financial freedom to fresh graduates and low-income individuals in the form of interest-only monthly installments only for the first two years.

However, there are certain considerations that must be taken into account. With graduated repayment plan, you pay significantly more as compared to the standard repayment plan because for the first two years of the repayment term you are paying interest only, which does not count towards loan repayment.

How TurboDocs Can Help You?

Over the last few years, the US government has done significant work towards improving the repayment plans available to the students. These repayment plans offer great help to student borrowers who want to improve their credit score and get rid of their loan debt on time. However, very few students are aware of all the repayment options available to them. Even fewer students are able to select the best repayment plan for them and complete the application process.

TurboDocs provides innovate student loan debt relief services to students and parents. We help our customers in student loan debt repayment and forgiveness planning. The team of TurboDocs strives hard to achieve its mission of a debt-free society.

If you want to make sure that your student loan repayment plan best fits your budget, contact TurboDocs. We can help you determine the best loan repayment plan for you. Call us at (855) 782-0744 and talk to our expert professionals.