Buying a Home

Save More for a Home With These Student Loan Repayment Options

Written by MoveEasy

Want to become a homeowner, but drowning in student loan debt? Not a public servant, nurse, teacher or any other profession that forgiveness programs seem to favor? There are a few options you may qualify for to lower your monthly payments so that you can begin saving for your dream house.

All Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans (made to graduate or professional students) are eligible to be repaid under the income-based repayment options. Many other loans will be eligible if consolidated. This means if you have consolidated a loan into a Direct Consolidation Loan, then it is eligible for an income-based repayment plan.

No private loans are accepted under these income-based plans, only federal student loans are accepted made to students. Generally loans made to parents are not eligible across the board even if they are consolidated into Direct Consolidation Loans unless you are using the ICR repayment plan. Under this plan almost all federal loans are eligible, though they will also need to be consolidated if not one of the 3 previously listed loans. Here are a list of the income-based student loan repayment options, how they work and their eligibility requirements.

Let’s get your piggy bank overflowing and on your way to a downpayment!

Income-Based Repayment (IBR)

How it works:

Under this plan your loan payments will be either 10% or 15% of your monthly income depending if you were a first-time borrower before or after July 1, 2014.

Any remaining balance at the end of your repayment period following successful monthly payments throughout your repayment period will be forgiven.

Repayment Period:

25 years for first-time borrowers before July 1, 2014 with payments 15% (at most) of your monthly income.

20 years for first-time borrowers after July 1, 2014 with payments 10% (at most) of your monthly income.

Are you Eligible?

Proven partial financial hardship (PFH)**

Pay as You Earn (PAYE)

How it works:

Under this plan your loan payments will be 10% of your monthly income.

Repayment Period:

20 years

Are you Eligible?

PAYE is a little complicated. To be eligible you will need to have been a first-time borrower on or after Oct. 1, 2007 and additionally you will need to have taken out a Direct Loan after Oct. 1, 2011. You will also need to have PFH.

Revised Pay as You Earn (REPAYE)

How it works:

Under this plan your loan payments will be 10% of your monthly income. Any remaining balance at the end of your repayment period following successful monthly payments throughout your repayment period will be forgiven..

Repayment Period:

20 years for undergraduate student loans and 25 years for graduate student loans.

Are you Eligible?

Students borrowers with any federal Direct loans are eligible as well as any other federal loan consolidated into Direct Loans. No PFH required.

Income-Contingent Repayment (ICR)

How it works:

Under this plan your loan payments will be 20% of your monthly income or the calculated monthly payments of a 12-year fixed loan. The lower monthly payments option wins.

Repayment Period:

25 years

Are you Eligible?

All borrowers with Direct Loans and other federal loans consolidated into Direct Loans (including loans made to parents). No PFH required.

**Partial Financial Hardship (PFH) is determined by taking your income and family size into consideration to calculate a monthly payment option. If the monthly payment determined is less than what the standard 10-year repayment option calculates, then you are given a PFH and are eligible for any of the income-based repayment options that require it.

Some of these repayments options may sound awfully confusing and you may have no idea which one you qualify for and your dream of beginning to save for a house may feel more unreachable, but let us assure you no math is required on your part. When you fill out an application for an income-based repayment option all you will need is your income, student loan debt balance and their interest rates, and then the government will do the work for you. You will be given options on each loan you qualify for.

So go forth, save, and let’s get you that house!

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