Figure Out Who You Owe and How Much You Owe

Information Services: Who You Owe

An important factor to consider is the identity of your loan service, loan provider or the organization that manages your loan. For government or federal loans and grants, you either pay at your schools financial office or directly to the U.S. Department of education. Most banks and private entities require you to pay to the branch closest to you or to their central office.

Where you pay and who you owe depend on the terms, conditions and stipulations of the loan. Remember, know who your loan service provider is and know how to contact the organization to which you owe your loan. Most, if not, all loan service, loan providers or lending organizations have central offices and institutions contactable through phone or electronic services. Many government and private data systems keep track of how much you owe them.

How Much You Owe, with Interest!

Stanard Repayment allows you to pay a constant amount every month until your student loans are fully-paid. You will make monthly payments until ten years of at least $50 until you complete your loans. The twelve-month payment may be higher since you will be paying it in the quickest possible time. For a ten-year payment, you pay the least interest.

Extended Repayment allows you to pay a constant annual or accumulated payment amount in a period not exceeding 25 years. The fixed monthly payment for your loan is lower than the standard but you will eventually pay more because of interest accrued in the 25-year repayment period. This plan is good for the borrower if he needs pay in smaller amounts in a longer period of time with the added interest.

In a Graduated Repayment, you start paying your loan in lower amounts that increase bi-annually up to the period of ten years. It is good if you expect an increase in your income over an amount of time. The monthly payment you spend will never be lower than the total interest that accumulates between payments. Even if the monthly payment eventually increases over time, no single payment will be higher than thrice other payments.

In Income Based Repayment, the needed monthly payment is dependent on family size and corresponding income. A borrower is qualified for IBR if regular payment amount under the IBR is of lesser amount than the monthly payment computed in a 10-year payment scheme. If the IBR is repaid for twenty-fiveyears and you meet other criteria, you have the balance of your loans cancelled. Also, if the borrower renders public service and has a reduced load payment scheme via this repayment option, your ten-year remaining balance could be cancelled.

Income Contingent Repayment makes Direct Loans obligations more flexible with your family's gross income in mind (this includes your income added to your wife/husband's income, when married), number of member in the family, and the amount total of the Direct Loans. Your maximum repayment period for this plan is 25 years. In ICR, you pay each month minus: the payment sum you will have to pay if your loan is repaid in 12 years times the income percentage factor proportional with the annual income; twenty percent of your family's monthly income.

The unsettled amount add to the capital once each year if payments are not enough to cover interest accrued on the corresponding loan,. But, this will not exceed ten percent of the amount owed originally upon entering payment. Interest will still accrue but it will not be capitalized to the loan as principal. If loans have not been repaid after the maximum period of 25 years, the unpaid portion is discharged. Taxes may be paid in exchange of the amount discharged.

Income-Sensitive Repayment helps FFEL borrowers can avail of a monthly loan payment based on their yearly income. As the borrower's income changes - increases or decreases - the amount in which you pay also increases or decreases. Your maximum repayment period for this plan is 10 years.

To calculate for the interest to be paid each month, we use the Simple Daily Interest Formula, which is: Number of days since last payment x Principal balance outstanding x Interest rate factor = Interest amount. The interest rate factor calculates interest accrued on the loan. It is calculated by dividing the interest rate by 365.25 (as in the 365 ¼ days of the year). Since interest accumulates over a daily basis on the loan, it is important to consider: number of days between the last payment, amount of loan balance, interest rate and how it accumulates each month.

Remember that student loans are real actual loans and that you must make your full loan payment on time, or face the penalties and consequences. Nevertheless, you can contact you lender and change your repayment plan, apply for deferment or forbearance and loan forgiveness or loan consolidation.