Choosing a repayment option is tough when you aren’t sure of what your kid’s future financial status will be. Every borrower’s situation is different and there isn’t a “one size fits all” when it comes to student loans. In this blog post, we’ll help find the best repayment plan for your student.
With iHELP, there are 3 repayment options for students while enrolled in school.
The total amount your student will pay for a loan depends on when they start to repay it. While enrolled at least half-time in school, students can elect to:
- Make no payments: Payments are not required while a student is in school. In fact, borrowers also have a 6-month grace period after graduation or dropping below half-time enrollment before payments are needed. This is the repayment option that borrowers are automatically set up with. We recommend students utilize this option but pay whatever they can afford toward their loans while in school to reduce the overall cost of the loan. There are no prepayment penalties with an iHELP private student loan. See a loan cost example of how much students can save by making in-school payments.
- Pay only the interest: Interest accrues from the time the loan is disbursed and will be added to the balance once the grace period ends. Students can request to make interest-only payments, but defer payments on the principal amount while enrolled in school. It is important to remember that once a student picks their repayment plan, they must stick with it. If there isn’t room in the budget to make monthly payments, students should opt for the deferred repayment option and pay what they can afford while in school.
- Make full payments: Students can request to pay both principal and interest amounts while enrolled in school. Again, students should only choose this option if they are able to make monthly payments consistently. Download the College Cost Calculator at the bottom of this article to budget accordingly.
iHELP offers 3 options once repayment begins.
Repayment begins based on the option your student selects when they apply for the loan. If they choose to make no payments while attending school at least half time, repayment begins 6 months after they graduate or are taking less than half time credits. If they choose to pay only the interest, interest-only payments begin 30-60 days after the first disbursement and principal payments will begin 6 months after they graduate or take less than half time credits. If they opt to make full payments while in school, repayment begins between 30-60 days after the first disbursement. Here are their options once their loan enters repayment:
- Pay only the interest: Students can request a 24 month interest only repayment schedule.
- Request graduated repayment: This option allows students to make interest only payments for a set period of time and then the payment amount gradually increases over time until they are making the full principal and interest payments.
- Make full payments. With an iHELP loan, this is the payment schedule students will automatically be set up with. They will make interest and principal payments just like on any other type of loan over a 20 year period. Interest only or graduated might be appealing, but if they can afford it in any way, recommend that they make full payments. If that means one less trip to Target, driving a car that’s not as nice or not buying new apartment furniture, it’s worth it. It’s a good time to start making not-always-fun adult decisions.
A benefit of an iHELP private student loan is the option to release the cosigner after 24 consecutive months of on-time payments, provided the borrower can meet the credit requirements on their own at that time. Keep in mind if you decide to co-sign your child’s loan, you are responsible for payment if your student defaults on the loan. Talk with your kid first about borrowing responsibly and make sure it is the right decision for you. If your student is really struggling to make student loan payments due to a short-term financial crisis, they may be able to put off their loans entirely for a short period of time with iHELP’s forbearance and deferment options. They should contact us as soon as they realize they may not be able to pay. Learn more about iHELP repayment options.
Looking to pay off loans faster?
If your student can spare a few extra dollars each month, encourage them to pay more than the minimum. As long as there is no unpaid accrued interest, any extra payment goes straight to their principal balance. This helps them tackle their loans even faster and pay less over the life of the loan.