The New Year is a good time to take stock of student loan repayment options
December 31 2015 - 8:00AM
It will be another new year soon, but before the countdown to
midnight begins, student loan borrowers should review their
repayment plans and available options. That’s the advice of
Navient, the largest student loan servicer, dedicated to helping
customers navigate the path to financial success.
“During this time of year when many people are looking over
their finances, thinking of New Year’s resolutions and preparing
for tax season, student loan borrowers should review their
available repayment plans and options,” said Jeff Whorley, group
president, asset management and servicing, Navient. “Borrowers
should ensure they are enrolled in the plan that meets their loan
repayment objectives, short-term and long-term financial goals and
future earnings expectations. As a student loan servicer, Navient
provides borrowers with information and resources about the options
available.”
The lowest cost, fastest way to repay a federal student loan is
generally the standard 10-year repayment plan. Under this plan,
according to the U.S. Department of Education’s Repayment
Estimator, a typical bachelor’s degree recipient who borrowed
$27,000 in federal student loans at a 5 percent interest rate would
make standard payments of $286 per month. Over the 10-year term,
this borrower’s interest would total approximately $7,400.
Federal student loans also offer options to lower the monthly
amount due by tying payments to income and making them over a
longer period of time, such as through the Income-Based Repayment
or Pay As You Earn plans. A newly introduced plan, Revised Pay As
You Earn or REPAYE, enables any federal Direct Loan borrower to set
payments to 10 percent of discretionary income. REPAYE offers loan
forgiveness of any remaining balance after a 20-year period of
qualifying payments for undergraduate borrowers, a 25-year period
for graduate borrowers, or a 10-year period for public service
professionals.
Under REPAYE, a bachelor’s degree recipient who borrowed $27,000
in loans and earns $35,000 at a technology company would—at $145
per month—pay significantly less each month initially than under
the standard plan. With 5 percent annual raises, the payment would
rise to $351 per month in the final year. In total, the borrower
would pay approximately $12,600 in interest charges before the
balance is repaid in 14 years, according to the Repayment
Estimator. The Department of Education blog provides additional
information that may be helpful to borrowers. For example,
the Department advises, “if you can afford to pay more on your
loan, you should, since this will save you more on interest costs
over the life of your loan.”
Eligibility criteria for the various income-driven repayment
plans are set by the federal government. Interested borrowers
can compare plans and electronically apply for the plan of their
choice at StudentLoans.gov. Customers with Navient-serviced loans
also may login to their account to model their payments under
various plans.
Navient also offers a repayment plan comparison chart and free
online modules on repayment options, IDR plans, budgeting and other
financial literacy topics.
Connect with @Navient on Facebook, Twitter and LinkedIn.
About Navient
As the nation's leading loan management, servicing and asset
recovery company, Navient (Nasdaq:NAVI) helps customers navigate
the path to financial success. Servicing more than $300 billion in
student loans, the company supports the educational and economic
achievements of more than 12 million Americans. A growing number of
public and private sector clients rely on Navient for proven
solutions to meet their financial goals. Learn more at
navient.com.
Contact:
Media: Patricia Nash Christel, 302-283-4076, patricia.christel@navient.com
Investors: Joe Fisher, 302-283-4075, joe.fisher@navient.com
Customers: 888-272-5543
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