Student loans are granted by commercial banks as well as credit unions for the educational welfare of students. These loans help students in getting higher education leading them to become qualified and well-settled. Students who borrow loans from financial institutions sometimes need to pay interest on the number of loans available, but sometimes interest-free loans are provided. Anyhow, the principal amount requires to be paid off on the fixed time.
Repayment time of student loans:
Generally, it is assumed that the student needs to repay the principal amount after the completion of his course or degree. Sometimes, the financial institutions or commercial banks provide a time of 6 months as the relaxation period for the repayment so that the student gets a secure job. This period can be increased as per the offers and policies provided by the respected lender. They give enough time to the students until they get a well-established job.
Different types of repayment plans:
- Income-driven: The interest might be higher in these payment plans, but each payment amount will be less. When you are earning less salary in the beginning, then you can go to this resort.
- Standard Payment: This repayment loan plan imposes less amount of interest as compared to the previous one. Hence, the overall amount becomes even for all months, making it easier for the student to repay.
Which is better: Early payoff or delay in payment?
It is believed that paying off your loan as soon as possible is a better idea than delaying it, as it will save you from foreign interests and penalties. Therefore, if the student has got secured and well-established job before the relaxation period is over, then it is suggested not to wait until that period is over.
Does student loan written-off?
If the student is not well or fit for doing the job, then the student loan might be waved-off. In this case, the student has to show medical proof of his illness from an authorized medical practitioner. He will then only require repaying the principal amount, and the interests will be canceled considering his health conditions. But this case is only applicable if the student is permanently unwell for doing the work that he has availed a loan from. In the case of temporary issues, the lending company might wait until he gets back on his track.