Student loan repayment plans

You don’t have to stick to a ten-year repayment plan when you consolidate your loans. If you need to have your monthly dues lowered so you can have a little extra money for savings and expenses then you can choose to have your repayment period extended from 12 to 30 years.
Consolidators offer several options regarding repayment and these include: income contingent repayment, graduated repayment and extended repayment.

The repayment option you choose really depends on your needs. Extending your repayment period may seem too attractive especially when you see how significantly lower the monthly bill becomes. However, if you can pay higher monthly fees then refrain from extending your repayment period. Extending your payment period increases the amount of interest paid over the lifetime of your loan. This means that even if the lender lowered the interest rate significantly, that small interest still adds up to a big amount over time.

To be able to resist extending your repayment period, compute the total amount you will be paying on your loan for the extended period.

In the end, you will decide what’s best for your finances. If the high monthly payments are draining your finances and you find yourself missing out on your bills and other payments then the extended payment period will definitely make it easier for you to pay your loan.

Make sure to keep a good balance between the money you will save now and the money you will save if you do not extend your loan too much. Try to see which repayment option will give you enough money to pay for your other expenses and at the same time won’t have you paying too much in the long run.

If you plan on extending your repayment period just so you have the little extra cash for shoes or clothes or things you can really live without, then there really is no need for you to consolidate. You have to understand that building personal wealth entails sacrifice. You have to make long-term financial goals for you to be able to build your fortune. Paying off your debts should be one of your priorities. Staying on budget and saving money should also be priority. Remember that a penny saved is a penny earned.

You are not consolidating your loans just so you can take on more loans you cannot afford to pay or just so you can have the extra cash for unessential things. If you really want loan consolidation to work for you then you must have specific goals on why you are applying for loan consolidation. These goals must be in-line with building personal wealth and gaining financial freedom. If you are going to spend the extra money you saved from your loan consolidation on unessential things, you are better off not applying for a loan extension and paying that extra cash your loan on standard payment terms.