If you are running out of cash to pay for your school expenses like books, tuition fees, dorm fees and some other miscellaneous fees you can always get a loan. Student financial aid direct loans are a program offered by the Education Department to students who needed help to get through college. It is a simple and inexpensive way of lending money to students to pay for their students after high school. If your school recognizes this kind of student loan, then you will need to complete what so called a master promissory note to qualify for this loan. The master promissory note would explain the loan terms and would serve as the legal binding agreement that you need to repay the Department. One god thing about this type of student loan is that you may switch your plan when your needs change.
Getting through college had been made easy for you, and you do have four repayment plans to choose from: the standard, graduated, income contingent and extended. These four options would help you decide which plan is suited for you. The standard plan allows you to pay a fixed amount monthly until you have paid your loan in full. You can pay as low as fifty dollars a month and you will have until ten years to repay your loan. The Standard plan would be good for the borrower if he can manage to have a higher monthly payment because that would mean you can repay your loan quicker.
Another payment mode is the graduated repayment. This plan allows you to start at a low monthly payment, but it would increase every two years. You can repay for your loan up to ten years. This plan would be good for you when you expect an increase in your income over time.
The income contingent repayment is a very flexible plan that helps you get through undue financial hardship. This is how your monthly payments will be calculated yearly: the monthly payment will be calculated based on your adjusted gross income (ad that includes your spouse’s income if you are married), the size of the family and the total amount of your loan. Under income contingent repayment program, you will pay monthly the lesser of the amount you would pay if you managed to repay the loan in twelve years multiplied by an income percentage factor that may differ from your annual income or your monthly discretionary income which will be multiplied by twenty percent. The monthly discretionary income is equal your adjusted gross income less the poverty level of the family size divided by twelve which is then figured out by the Health and Human Resources Department. The maximum repayment time for this is twenty-five years. if you are enrolled under the standard or extended plan and decided to switch to ICR later, the period under the former plan is counted towards your twenty-five year repayment period. If, after twenty-five years and you still haven’t fully paid your loan under this plan the unpaid portion will be discharged. However, you need to pay taxes for the discharged amount.
