Loan repayment flexibility

footnote 1 To find out the repayment term for your student loans, log in to your Sallie Mae account. We offer several repayment options over the life of your loan. Keep in mind that the Medical Residency and Relocation, Dental Residency and Relocation, and Bar Study loans are designed to cover post-graduate school expenses, so deferred repayment is the only in-school repayment option available.

Repayment programs When it comes time to repay your student loan, you may have some options. Keep in mind that repayment programs may increase your Total Loan Cost, so we recommend checking with your cosigner first if you have one to see if they can help with your payments.

In-School Payment Assistance lets you temporarily postpone your payments while in school and can help you avoid delinquency if you're struggling. The Graduated Repayment Period GRP lets you make interest-only payments for 12 months after your separation period time after school.

footnote 1 Learn more about the GRP. Learn more about facing financial difficulties. Defer your student loans when you go back to school at least half-time or are selected for a program.

With a deferment, you can reduce or postpone payments when you go back to school or begin an internship, law clerkship, fellowship, or residency. footnote 3 Learn more about deferring loans while in graduate school. Deferment or forbearance during military service may be able to postpone payments on your student loans during military service.

For more information and eligibility requirements, please chat with us or call Learn more here. Repayment Plans for Federal Student Loans December 26, New section.

Search FIRST Sign in to the MLOC® tool, DLOC or OLOC Register for the next FIRST Webinar February 20, ALERTS. Reviewing Your Repayment Options Select a plan that provides a manageable payment, but keep in mind that the longer it takes you to repay your loan, the more expensive the loan may be.

When Will Repayment Start? Types of Repayment Plans There are two types of repayment plans — Traditional and Income-Driven Repayment IDR plans. Traditional Repayment Plans Standard Repayment Fixed monthly payment. Default plan if no other plan is chosen. Extended Repayment Reduced payments stretched over a longer term without consolidating.

May be more costly because of longer term and total interest paid. Graduated Repayment Starts with initially smaller payments, but payments will increase every two years. May result in higher costs compared to the Standard plan. Income-Driven Repayment IDR Plans SAVE Saving on a Valuable Education This plan went into effect in August and is for Direct Loan borrowers only.

Borrowers can exclude spousal income from payment calculation if borrower files taxes separately from their spouse. PAYE Pay As You Earn This plan will no longer be available after July 1, Partial Financial Hardship PFH is needed to qualify to enter the plan.

Up to a year repayment term. If balance remains at the end of the term, balance is forgiven; however, amount forgiven is taxable. ICR Income-Contingent Repayment This plan will no longer be available after July 1, Current benefits include: Offers monthly payment based on discretionary income and family size.

We find that behavioural characteristics matter: time-consistent borrowers, those who draft a budget for their business activity more frequently, as well as those who worry more about household expenditures, are more likely to opt for the flexible versus the rigid contract.

This suggests that more disciplined and forward-looking borrowers seem to highly value repayment flexibility. Our experiment casts new light on the role of repayment flexibility and how it can be innovatively introduced into microfinance contracts in a way that is sustainable for lenders.

More generally, our study shows that a screening mechanism, which builds on contract choice through different prices, could be implemented effectively to identify more entrepreneurial and financially sophisticated borrowers when lenders lack information on their quality.

From a policy perspective, our findings highlight the need for conducting further research that explores different ways of modifying contract characteristics and introducing repayment flexibility in microfinance contracts.

The main objective of this research agenda is to guide lenders in developing countries to adopt a more customised approach towards their customers , catering to borrowers with heterogeneous business opportunities and financial needs, as well as different behavioural characteristics.

Lenders in developing countries need to adopt a more customised approach towards borrowers. Irregular income and flexible repayment Borrowers who have irregular incomes often find it hard to adhere to frequent, rigid repayment schedules.

The study Research from Uttar Pradesh, India shows that offering a flexible schedule as a more expensive contract option than the standard, rigid contract leads to higher business sales without undermining repayment rates. Methodology We suggest a novel way to introduce repayment flexibility in microfinance contracts: offering it as a pricy contract option.

Findings One year after the start of the intervention, we compared the two groups of Sonata branches — those that were offered both the flexible and the rigid contract treatment branches and those that were only offered the rigid contract control branches. Implications Our experiment casts new light on the role of repayment flexibility and how it can be innovatively introduced into microfinance contracts in a way that is sustainable for lenders.

Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you

Payments can be fixed or graduated, providing greater flexibility in managing monthly financial obligations. This extended timeframe can result Need guidance on paying off your federal and private student loans? See repayment tips to manage loan payments or find help if your loan is in collections With a flexible repayment schedule, your monthly payment amount is based on your income and family size. This can help make your payments more: Loan repayment flexibility





















Standard Local charities for financial struggles are clustered at the BRAC Loan repayment flexibility office level. C90 - General. Set up an online Loaan with your Repaymeent s so that you can Loan repayment flexibility manage your loans. Also, Groh and McKenzie evaluate an insurance against macroeconomic shocks provided to microfinance clients in Egypt. The rest of Table 2 explores other outcomes related to credit and transfers. This condition holds if the savings from postponing the first repayment outweigh the increased diversion cost due to the higher repayment burden. All the Dabi -related outcomes shown in Figure 3 A , with the exception of non-BRAC loan value and per-capita consumption expenditure, are positively affected, with a majority of them being statistically significant. Please review our updated Terms of Service. The sample size shrinks, as the value per unit is undefined for respondents who do not own any assets of a given category. While their focus is on entry into entrepreneurship, we study investments in and the growth of existing businesses. These results should be interpreted with some caution due to the small sample size and noisy indicators, which affect the precision of the empirical tests. This is in line with concerns reported by many practitioners and credit officers in the microfinance industry that moving away from the traditional microfinance model may cause default rates to increase in the long run. The average size of a Dabi loan is nominal USD range between and 1, Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Among the many attractions of a Federal student loan is the flexibility it offers in repayment terms. You won't be required to begin repaying your Federal After your separation or grace period, you'll be required to make principal and interest payments. There may be programs available for budget flexibility, such Select a plan that provides a manageable payment, but keep in mind that the longer it takes you to repay your loan, the more expensive the loan Repayment flexibility By contrast, the flexible contract allows borrowers to delay up to 2 monthly repayments at any point during the loan cycle using repayment vouchers. On the day Loan flexibility does not increase risk for banks Banks may worry that repayment rates will suffer; however, we find that offering a menu of Loan repayment flexibility
Loan repayment flexibility flexibiljty our theory, repayment flexibility should increase Loan repayment flexibility taking if insurance markets are imperfect and the loan payment is the main Credit score factors to consider obligation. Repsyment set-up incorporates our Llan main mechanisms. Learn more about facing financial difficulties. C62 - Existence and Stability Conditions of Equilibrium. So be forewarned: Receiving loan forgiveness under the PSLF program is not an easy task. We investigate this prediction by comparing the characteristics of the firm owners that choose to borrow from BRAC in the treatment and control branches after the introduction of the flexible contract. Coordinated by. Similar to the credit market outcomes, we can reject the null hypothesis of equality of the treatment effects of the Dabi versus the Progoti borrowers for the aggregate index but not for most of the individual outcomes see Supplementary Table A. The White House Biden Administration. J01 - Labor Economics: General. Google Scholar. J13 - Fertility; Family Planning; Child Care; Children; Youth. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Among the many attractions of a Federal student loan is the flexibility it offers in repayment terms. You won't be required to begin repaying your Federal 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Loan repayment flexibility
Student Debt: What It Means, How It Works, Loan repayment flexibility Flexiiblity Student Loan repayment flexibility refers to loans used to pay for college tuition and Financial Assistance For Disasters after repayjent student graduates flexibbility leaves school. The results for the Progoti borrowers are presented Loan repayment flexibility Supplementary Table A. Rpayment - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness. Moreover, by providing evidence on the selection effects of introducing a new loan product with greater repayment flexibility, we also contribute to empirical work gauging selection in developing-country credit markets see, e. BRAC selected fifty branches for the study and credit officers in each branch identified Dabi and Progoti borrowers that they deemed eligible for the flexible loan. Moreover, if borrowers wanted, they could skip 2 repayments and pay up their remaining balance within the 12th month, thus keeping the length of the loan cycle unchanged. Illiquid business assets, including special purpose tools, machinery but also certain types of inventory, are common in our setting. and Ponticelli , J. The effect of the shock itself should also be negative as it lowers overall demand. While improved availability of credit and insurance ought to help aspiring entrepreneurs, existing evidence shows that conventional microcredit has not generated substantial firm growth, at least on average Banerjee et al. Overall, the interaction effect with the negative rainfall shock entirely removes the positive impact of treatment on revenues, costs, and profits which in absence of floods is significantly greater among Dabi clients in the treatment group relative to control. You might also consider refinancing your private loans if that would get you a lower interest rate. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan Payments can be fixed or graduated, providing greater flexibility in managing monthly financial obligations. This extended timeframe can result Following this, we sur- veyed a random sample of these borrowers. After our baseline survey, BRAC offered the flexible loan contract to eligible clients in 25 With a flexible repayment schedule, your monthly payment amount is based on your income and family size. This can help make your payments more Payments can be fixed or graduated, providing greater flexibility in managing monthly financial obligations. This extended timeframe can result Need guidance on paying off your federal and private student loans? See repayment tips to manage loan payments or find help if your loan is in collections Loan repayment flexibility
E40 credit counseling benefits General. The Loan repayment flexibility was stratified relayment district 15 randomization strataeach containing 2—5 of the dlexibility offices in our study. We conduct the randomized evaluation of the flexible flexibiilty in Bangladesh together with one of the largest microfinance institutions in the world, BRAC. This may explain why microfinance institutions are so reluctant to offer flexible repayment schedules. Keep in mind that the Medical Residency and Relocation, Dental Residency and Relocation, and Bar Study loans are designed to cover post-graduate school expenses, so deferred repayment is the only in-school repayment option available. The effect of the shock itself should also be negative as it lowers overall demand. Similarly, we find no consistent and significant impact of ability as proxied by schooling —see Supplementary Table A. Federal Student Aid. Only go back to school if it will pay off. At the same time, the effects for the larger loan are much more modest. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Need guidance on paying off your federal and private student loans? See repayment tips to manage loan payments or find help if your loan is in collections Following this, we sur- veyed a random sample of these borrowers. After our baseline survey, BRAC offered the flexible loan contract to eligible clients in 25 There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Among the many attractions of a Federal student loan is the flexibility it offers in repayment terms. You won't be required to begin repaying your Federal Less frequent repayment can reduce the cost of smoothing consumption in the event of negative health and business shocks. This reduced cost to Select a plan that provides a manageable payment, but keep in mind that the longer it takes you to repay your loan, the more expensive the loan Loan repayment flexibility

Loan repayment flexibility - Loan flexibility does not increase risk for banks Banks may worry that repayment rates will suffer; however, we find that offering a menu of Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you

In the same vein, we also compare the distribution of earnings in the treatment and control samples. We observe that Dabi borrowers in the left tail of the distribution experience lower revenue and lower income growth relative to the control group, while they do better in the upper quantiles.

These two findings are consistent with flexibility leading to greater risk taking, causing some individuals in the treatment group to lose out relative to control , while others gain. Second, we study how treated businesses are affected by demand uncertainty.

Greater uncertainty should matter more for borrowers that take on additional risk. Third, we explore quasi-experimental variation in the form of local demand shocks. In Bangladesh, excessive flooding during the growing season of the main crop Boro rice is particularly harmful and constitutes an important downturn in local economic activity.

We find that treatment effects on business profits and revenues for Dabi borrowers are significant and positive, only in locations that experienced favourable rainfall.

In locations with extreme flooding, the treatment impact is indistinguishable from zero. This implies that the flexible contract induced a shift to activities more sensitive to aggregate uncertainty, at least among the Dabi clients.

Finally, we show that Dabi borrowers increased their holdings across a range of illiquid business assets. When we study the same four dimensions for the larger Progoti borrowers, we do not see evidence of any meaningful heterogeneity nor an increase in the value of the business assets used.

One explanation for these results rationalized by the model is that larger firms have other external commitments such that too much risk remains even with repayment flexibility.

In this case, large insurance-rationed firms refrain from taking on additional risk explaining the much more modest treatment effects.

We find no evidence of significant heterogeneity along these dimensions for the Dabi sample. While this implies that credit rationing is less important in explaining the relative benefit of the flexible over the standard contract for the Dabi borrowers, it does not necessarily mean that eligible Dabi clients would not be credit constrained if no external financing was available.

We do, however, find that the lack of an average treatment effect on the Progoti borrowers masks important heterogeneity in the response across the skill level of the entrepreneur: treatment leads to an increase in the revenues and profits among Progoti clients with higher skills at baseline.

This is consistent with the theoretical prediction that more able Progoti borrowers might be held back under the standard contract, indicating that repayment flexibility helped alleviate the credit constraint of the larger firms.

Finally, we consider how the new contract affected the selection of individuals into borrowing. In particular, we test if the introduction of the flexible loan attracted different types of clients in the treated branches relative to control. To do this, we conducted a census of small and medium enterprises SMEs operating in the 50 branches at baseline, surveying a random sample of the SMEs prior to branch randomization.

We then compare, within this representative sample of SMEs, whether those borrowing from BRAC in the treatment branches at follow-up are significantly different in terms of their baseline characteristics.

We find that the degree of risk aversion in the borrower pool declines as less risk-averse entrepreneurs with a desire to start a new business were more likely to become BRAC borrowers in the treated branches. According to our model, this suggests that the flexible contract primarily attracts borrowers willing to take risks to grow their businesses.

In sum, the results imply that repayment flexibility benefits traditional microfinance borrowers mainly through the provision of insurance, enabling riskier investments at lower default rates.

To the extent other contractual obligations hold back the Progoti clients, there is some evidence that the flexible contract alleviates the credit constraint faced by the larger firms, with the returns to the flexible contract being higher for more able entrepreneurs.

The contract also draws in borrowers that are less averse to risk and more willing to expand their business activities. The findings highlight the benefit of a novel product that simultaneously provides credit and insurance to microfinance clients, contributing to work examining the overall success of microfinance by focusing on the inframarginal borrowers Banerjee et al.

At the same time, some caution is warranted as the effects for larger loans are less transformative. The present paper builds on and adds to three main literatures. First, it provides causal evidence on the joint importance of capital constraints and incomplete insurance on the growth of non-agricultural firms.

While a large literature has studied the role of credit constraints for firms see, e. Fafchamps et al. Past studies show that the provision of subsidized access to insurance leads to higher farm investment and take up of new technologies, increasing farm profit through greater risk taking Giné and Yang, ; Mobarak and Rosenzweig, ; Cai, ; Carter et al.

They find that the binding constraint is uninsured risk, with farmers making riskier production choices when offered insurance. Our results complement Karlan et al. Exploiting variation in the timing of the transfers they show that insurance as opposed to credit constraints drive this effect.

While their focus is on entry into entrepreneurship, we study investments in and the growth of existing businesses. Second, we link to a small but growing literature that investigates credit contract structure in microfinance, with the most notable precursor to our work being Field et al.

They evaluate the effects of giving a 2-month grace period to microfinance clients and find that this leads to an increase in short-term investments and long-run business profits, but also in default rates.

Barboni and Agarwal show that 3-month blocks of repayment holidays chosen in advance attracts financially disciplined clients and leads to higher repayment rates and higher sales. As such, the contract we study not only encompasses an early grace period or planned blocks, but also caters to unexpected shocks occurring in any given month throughout the loan cycle.

Work on financial flexibility Gamba and Trianti, ; DeAngelo et al. Holmström and Tirole, , emphasizes the capacity to restructure financing, hoard reserves, and hedge against risk to facilitate unexpected changes in cash flows or investment opportunities, especially in a volatile business environment.

Our financial contracting model illustrates how repayment flexibility affects credit and insurance constraints as compared to the standard debt contract.

We also discuss how the theory extends to account for entrepreneurial ability, other contractual obligations, and selection into borrowing. Formal proofs are in Section A. The entrepreneur can finance a fixed investment I at date 1 using either a liquid short-term or an illiquid long-term technology.

In periods 1 and 3, she also receives income y to meet any remaining needs. Credit is limited as repayment is imperfectly enforceable. Free market entry ensures all surplus goes to the borrower, subject to incentive compatibility. With the addition of a repayment burden, the entrepreneur also enters an informal risk-sharing scheme to cover consumption, reinvestment, and repayment in case of a return shortfall in period 2.

The set-up incorporates our two main mechanisms. To capture the credit-constraint mechanism, we rely on the conventional idea that moral hazard at the repayment stage gives rise to credit rationing of poor entrepreneurs. Repayment vouchers reduce this need, allowing poor borrowers to allocate more funds for investment which relaxes the credit constraint.

To capture the insurance-constraint mechanism, entrepreneurs choose between a safe liquid and a risky illiquid investment. By insuring against costly liquidation to repay the loan , the vouchers alleviate the insurance constraint and facilitate investment in riskier illiquid assets.

To differentiate the credit from the insurance mechanism, we view constraints related to the initial investment as distinct from those tied to managing a state-contingent shock later in the loan cycle.

While credit constraints might prevent the investment from taking place, insurance constraints could result in an inability to hedge against future income loss risks. However, a funds shortage is the common friction underlying both constraints.

By assuming constrained savings, we illustrate how the standard payment obligation limits the entrepreneur when no other means of insurance is available. Thus, a negative period-2 shock forces the entrepreneur to either not reinvest the returns from the liquid project or liquidate if invested in the illiquid technology.

Next, we analyse each contract standard and flexible to understand how credit and insurance market imperfections affect investment.

The analysis, grouped by the completeness of the informal insurance market, starts with the standard contract. Without informal risk pooling, a wealth-constrained entrepreneur opts for the safer technology, as the expected benefit of avoiding intermediate period liquidation exceeds the final period gain from the riskier illiquid project.

In Supplementary Appendix A. The entrepreneur pays the lender if the residual return after repaying exceeds the benefit from diverting all resources. The entrepreneur only repays in the second period if she does not plan to default in the third.

The following proposition summarizes our first result. The large repayment obligation would yield a residual return below the payoff from diverting all resources.

If the entrepreneur chooses the liquid project, the voucher enables reinvestment of project proceeds at date 2, even under the low-return realization. If she invests in the illiquid technology, she avoids the intermediate period liquidation risk and fully benefits from the high-return project.

Unlike above, there is only one relevant incentive constraint to consider. In the final period, the temptation to divert all resources is resisted in favour of repaying the full loan if. Since vouchers increase the discounted project value, Proposition 2 also characterizes the outcome when both credit contracts are offered simultaneously.

Repayment flexibility raises the return to both technologies, but in different ways. Vouchers alleviate the insurance constraint by eliminating the liquidation risk for the illiquid project, and they free up working capital for reinvestment in the liquid technology.

Two opposing forces are at play. On one hand, vouchers eliminate the need to save for the first repayment, freeing more funds for the initial investment.

Additionally, the gross return to honouring the contract is higher with the riskier project. Both effects increase the value of investment over diversion, making lending to poorer borrowers incentive compatible. Lastly, while all borrowers take up the vouchers, they are indifferent between using them and adhering to the standard contract upon a positive period-2 realization.

Essentially, vouchers offer an option value that protects entrepreneurs against future unforeseen fluctuations.

The subsequent corollary collects these additional results. With a complete risk market and the standard contract on offer, ex-post risk pooling eliminates the liquidation risk, leading the entrepreneur to select the illiquid project.

where I γ ¯ is the expected period-2 return under risk pooling. This condition holds if the savings from postponing the first repayment outweigh the increased diversion cost due to the higher repayment burden. However, if ability and investment capital are complements, then more able entrepreneurs will have a higher productivity for a given level of assets.

Since vouchers ease the credit constraint, the return to relaxing this constraint is higher for entrepreneurs of greater ability the formal argument is detailed in Supplementary Appendix A. We have so far assumed that the loan payment is the primary obligation.

However, there could be other commitments on top of the repayment , such as recurrent costs. Particularly, larger firms are often committed to periodic expenses like rent, utilities, and salaries.

While vouchers release liquidity that can be reinvested in the safe project, the net gain from introducing more flexibility is reduced, especially if the return to the liquid technology is low. In the basic model, vouchers provide an insurance mechanism, even in the context of universal risk neutrality.

To explore how repayment flexibility affects the selection of individuals into borrowing along the risk dimension, we modify the model to incorporate risk aversion. In line with our empirical setting, we assume a smaller self-financed project is available, which appeals to less risk-averse individuals interested in business expansion and thus, in need of external credit.

While it attracts clients deterred by the risk of existing investment technologies, it also appeals to borrowers who find the large illiquid project too risky and the large liquid project too safe.

We start with the case when the loan payment is the key outstanding obligation Panel A. With complete credit and insurance markets row 4 , repayment vouchers have no impact on outcomes. Notes: The table summarizes the predictions of the theoretical model, conditional on the different market imperfections.

a In contrast to row 1 of Panel A, the increase in risky investment in row 3 is confined to poor borrowers. b Contrary to row 1 of Panel B, the increase in safe investment in row 3 is limited to poor borrowers.

We then consider the case when other contractual obligations are important Panel B. The theory suggests that vouchers lead credit and risk-rationed firms to boost their safe investments row 1. While flexibility still benefits able entrepreneurs, poorer individuals may not gain due to the low investment return.

If insurance provision is imperfect row 2 , the theory predicts a rise in the safe investment. Similar to Panel A, risk aversion can induce borrower selection rows 1 and 2. Vouchers benefit poor and high-ability entrepreneurs now making safe investments if only credit constraints bind row 3.

With well-functioning markets, vouchers have no effect row 4. A key prediction is that increased risk taking is the single most important response if entrepreneurs are limited by imperfect risk markets.

However, the theory also suggests that if firms have other contractual obligations beyond the loan payment, repayment flexibility alone may not increase risk taking. We use this framework to structure our empirical analysis and interpret the results in the subsequent sections.

Our study is set in Bangladesh where our partner, BRAC, is one of the main providers of microfinance services. tailoring, small retail shops, poultry and livestock rearing, and carpentry.

The average size of a Dabi loan is nominal USD range between and 1, Currently, BRAC has 4 million Dabi borrowers in Bangladesh. They require collateral of equal value to the loan and a guarantor. We collaborated with BRAC to implement a pilot assessing the viability of a flexible loan product.

The flexible contract allowed borrowers to delay up to 2 repayments within their loan cycle through the use of repayment vouchers. BRAC decided to offer the option to borrow under the flexible contract to Dabi and Progoti clients with good credit histories. The eligible clients were selected by credit officers at the branch office level on the basis of having no defaults and few or no arrears.

Under the flexible contract, borrowers had 2 vouchers that enabled them to postpone 2 monthly repayments in their loan cycle. On the day of the repayment, borrowers could present the voucher thereby postponing the repayment and extending the loan cycle. Specifically, by extending the cycle to 14 instead of 12 months the borrowers had 2 months during which they were not required to make any payments to BRAC.

For example, if borrowers skipped the first two installments, the repayments started in month 3 and continued up to month 14 corresponding to a contract that provides a 2-month grace period. If clients decided to use their vouchers to avoid any other installment s , the repayment in that month would be skipped and the full loan cycle was extended by an additional month.

Hence, the contract provided the borrowers with full flexibility to tailor-make their loan cycle according to their expected and unexpected cash-flow needs they were still limited to delaying no more than 2 repayments.

Moreover, if borrowers wanted, they could skip 2 repayments and pay up their remaining balance within the 12th month, thus keeping the length of the loan cycle unchanged.

As such, the vouchers offered considerable payment flexibility. To evaluate the effects of the new loan contract, we randomized the introduction of the flexible loan at the BRAC branch office level.

The typical branch office covers an area of a roughly 6-km radius with Progoti and nearly 1, Dabi borrowers. BRAC selected fifty branches for the study and credit officers in each branch identified Dabi and Progoti borrowers that they deemed eligible for the flexible loan.

BRAC subsequently provided us with a list of the eligible clients in each branch. From this list, we randomly sampled 2, eligible borrowers; 1, Dabi and 1, Progoti clients. We also obtained a list of all ineligible clients in the same 50 branches.

In addition to eligible BRAC clients, we collected information on a representative sample of SMEs independent of their borrowing status with BRAC. For this, we first conducted a census within the geographic location of each BRAC branch office by going door-to-door, capturing a comprehensive listing of all SMEs operating in selected sectors in the study branches.

The objective was to identify microenterprises with fewer than 10 workers operating in light manufacturing and retail. These characteristics were chosen to make them comparable with potential BRAC borrowers. The baseline survey for our two samples was conducted between January and June After the baseline, we randomly selected half of the 50 branches as treatment and the rest as control.

The randomization was stratified by district 15 randomization strata , each containing 2—5 of the branch offices in our study. Figure 2 shows the locations of the BRAC branches included and their randomization status. The flexible loan product was launched in mid-August By the end of September , the intervention had been introduced in all branches.

Immediately following the product launch, we collaborated with BRAC to implement an information campaign in the treatment branches.

Its goal was to ensure that information regarding the new loan that BRAC was piloting reached the firms in the SME sample. During these phone calls, the terms of the new loan product were explained; and ii leaflets, describing the same information, delivered by BRAC credit officers to the firms in the SME sample and to firms in the eligible-borrower sample.

Notes: The map shows the locations of the BRAC branch offices that were part of the study. The treatment branches are represented with triangles, while the control branches are denoted with squares.

Approximately 1 year after the baseline, between May and July , we implemented the first follow-up survey the mid-line. Since the intervention was launched in August , the effects at mid-line capture short-run impacts 8—10 months after treatment started.

Nearly 1 year after the mid-line and 2 years after the baseline , we conducted the endline survey. Finally, to measure local rainfall shocks, we use monthly rainfall data at 0. Supplementary Table A. For all of the outcome variables we study as well as other key characteristics, Supplementary Tables A.

In particular, column 3 shows the standard difference, column 4 the randomization inference p -values, and column 5 reports the normalized difference Imbens and Wooldridge, With the exception of two characteristics out of 31 , none of the baseline differences are statistically significant at conventional levels and the normalized differences are smaller than one-fourth of the combined sample variation.

Hence, we conclude that the randomization was successful in achieving baseline balance in key observable characteristics.

In Supplementary Table A. The attrition rates are balanced by treatment status in both follow-up surveys. Thus, it is unlikely that differential attrition drives the treatment effects we find in the empirical analysis.

To identify the effects of the flexible loan contract on eligible borrowers, we estimate an analysis of covariance ANCOVA model McKenzie, of the form:. Since our randomization was conducted at the branch office level, we cluster standard errors by BRAC branch office 50 clusters. The randomization inference p -values report the percentile of the coefficients found under actual treatment in the distribution of coefficients identified under the alternative treatment assignments Young, The parameter of interest is β , the average difference between treatment and control observations at mid- and endline.

Under the assumption that the control observations constitute a valid counterfactual for the treatment sample, this identifies the causal effect of the offer of the flexible loan contract to eligible client i.

In other words, this is the ITT estimate. Table 2 presents the results for the Dabi Panel A and Progoti clients Panel B , respectively. Compared to this, the introduction of repayment flexibility increased borrowing from BRAC by 6.

For Progoti clients, the flexible loan offer increased take up from BRAC by 2 ppt , but this effect is imprecisely estimated. Notes: The table presents the treatment effects on loans and transfers of eligible Dabi and Progoti borrowers. All regressions control for the baseline value of the outcome, an indicator variable for the endline survey and district strata fixed effects.

The regressions are ordinary least squares OLS regressions based on specification 4. Randomization inference p -values of the null hypothesis of no effect are provided in square brackets.

In column 2 , the dependent variable is the principal amount in USD PPP of the BRAC loan the respondent had at the mid-line or endline survey. Non-BRAC loan value is the monetary value in USD PPP of all formal and informal loans taken from other lenders banks, MFIs other than BRAC, informal money-lenders or relatives and friends during the past 12 months.

Net borrowing or transfers is the monetary value in USD PPP of net borrowing loans borrowed minus loans lent and net tranfers tranfers received minus transfers given combined. The rest of Table 2 explores other outcomes related to credit and transfers. Starting with Dabi , while the treatment decreased the likelihood of having a non-BRAC loan by 4 ppt [column 3 ], the impact on the intensive margin is small and imprecisely estimated [column 4 ], barring any definitive conclusions on substitution effects away from non-BRAC lenders toward BRAC.

Eligible Dabi borrowers also receive more informal transfers from their social networks with the point estimate similar in size to the effect on the BRAC loan , albeit insignificantly so [column 5 ].

Column 6 examines transfers and loans provided to the social network. The last column presents the effect on an aggregate index that combines the 7 indicators related to the credit market outcomes of the Dabi clients.

We find that the aggregate index is significantly higher by 0. By contrast, Panel B indicates that the impact on the eligible Progoti borrowers is insignificant [with the exception of one outcome: the likelihood of having a non-BRAC loan in column 3 ]. As the aggregate index in column 8 is indistinguishable from zero, we conclude that the treatment did not significantly affect the credit market outcomes of the eligible Progoti clients.

Next, we examine the impact of repayment flexibility on a range of business outcomes. The upper panel of Table 3 shows effects for the eligible Dabi clients, starting with business ownership in column 1.

In terms of inputs, the treated Dabi borrowers invest significantly more in their business assets but not in labour.

We do not find any significant effect in terms of labour inputs number of workers, business operating hours, and hours worked by the business owner. Column 6 shows that treatment raised revenues by 28, USD PPP annually relative to the control sample.

Eligible clients also had higher costs which is likely related to the larger investments in their business capital e. cost of purchasing tools, machines, or inventories.

Column 10 shows that Dabi businesses in the treatment group had more volatile revenues. As a proxy for volatility, we use the range of monthly revenues. Finally, column 10 shows that the aggregate index is up by 0. Overall, these findings suggest that the flexible contract not only led to more business activity and greater business investments, but also increased the volatility of the monthly business revenues among the Dabi borrowers.

In particular, there are no significant effects on any of the business outcomes except for the number of workers, and the overall impact on the aggregate index in column 11 is close to zero and insignificant. Notes: The table presents the treatment effects on business outcomes of eligible Dabi and Progoti borrowers.

Data comes from the mid-line and endline surveys. The regressions are OLS regressions based on specification 4. Business owner is a dummy variable equal to one if the respondent owns a business. Business assets is the monetary value in USD PPP of business assets tools, machinery, furniture, vehicle and inventories at the time of the survey.

Number of workers is the number of workers other than household members who work in the business on a typical working day. Business hours is the number of hours that the enterprise was in operation over the last 12 months. Revenues is the monetary value in USD PPP of sold products or delivered services of the business over the last 12 months.

Costs is the monetary value in USD PPP of the total amount the enterprise spent on personnel expenses, machines, tools, equipment, space, transportation, electricity, fuel for machines, and total purchase of stock over the last 12 months. Profits annual is profit in USD PPP of the business over the last 12 months.

Profits month is profit in USD PPP of the business over the month preceding the survey. Range of revenues is the difference between the level of revenues during the worst month in terms of sales and the level of revenues during the best month in terms of sales during the past year.

If the respondent reported that revenues did not fluctuate throughout the year, the range of revenues is set equal to zero. The third and final set of outcomes are related to the socio-economic status of the eligible borrowers. Given that land ownership is a key indicator of socio-economic status in rural Bangladesh, this is an important sign that the status of the eligible Dabi clients improved as a result of the intervention.

The aggregate index in column 6 also shows a significant increase of 0. In contrast to the Dabi borrowers, there are no significant effects on any of the outcomes nor on the aggregate index for the Progoti clients Panel B of Table 4.

Notes: The table presents the treatment effects on indicators of household socio-economic status outcomes of eligible Dabi and Progoti borrowers. All regressions control for the baseline value of the outcome, an indicator variable for the endline survey and district randomization strata fixed effects.

Consumption per capita is the monetary value in USD PPP of the total household expenditure per capita in PPP USD over the last 12 months divided by the household size on consumption measures.

Size of land wwned is the amount in decimals of land owned by the household excluding the homestead. Figure 3 provides a visual summary of the treatment impact on the eligible clients. It plots the ITT effects on standardized indicators related to the three families of outcomes we study credit market, business, and household economic status.

All the Dabi -related outcomes shown in Figure 3 A , with the exception of non-BRAC loan value and per-capita consumption expenditure, are positively affected, with a majority of them being statistically significant.

In particular, we observe large effects on business revenues 0. Overall, we do not find evidence of a significant average impact on the outcomes of the Progoti clients. ITT effects: A effects on Dabi borrowers and B effects on Progoti borrowers.

The sample includes eligible Dabi borrowers in Panel A; and eligible Progoti clients in Panel B. Standard errors are clustered at the BRAC branch office level.

A possible concern with the large treatment effects detected among the Dabi clients is whether the results are driven by some peculiarity of our context or the eligible sample itself. To assess this, we compare our estimates to the treatment effects found in Field et al.

Even though the product we examine is quite different, allowing borrowers to manage payments freely over the loan cycle in a state-contingent manner, Field et al.

This builds confidence in the external validity of our findings and suggests that the large treatment effects are not driven by some special feature of our context or sample. In particular, we test if the repayment rates of the eligible clients and their demand for BRAC loans are affected by the introduction of the flexible loan contract.

Table 5 reports the impact on client retention and default for the eligible borrowers. Column 1 shows that treated Dabi clients are 6. The effect on Progoti borrowers is also negative but imprecisely estimated. We first present the official default classification used by BRAC [column 2 ] and then assess how repayments change depending on the time elapsed since the start of the contract [columns 3 and 4 ] or since the end of the loan cycle [columns 5 — 7 ].

Specifically, column 2 reports the effect on the official default rate defined as the likelihood of not having repaid the loan by the end of the loan cycle. In the treatment branches, they are 1. The corresponding impact is close to zero for the Progoti clients. Notes: The table presents the treatment effects on retention and loan repayment of eligible Dabi and Progoti borrowers.

Borrower no longer with BRAC is a dummy variable taking the value of one if the client has repaid the loan and not taken out a new one as opposed to having a current loan or having defaulted. Default is a dummy variable taking the value of one if the borrower was categorized by the credit officer as not having repaid the loan by the end of the loan cycle.

Loan not fully paid in 12 months is a dummy variable taking the value of one if the borrower does not repay the full loan by the end of the loan cycle 12 months. Loan not fully paid by the end of the loan cycle is a dummy variable taking the value of one if the borrower does not repay the full loan within the 14th month in the treatment branches and by the 12th month in the control branches.

Full loan not repaid within 2 6 [12] months after the end of the loan cycle are dummy variables taking the value of one if the borrower did not repay the full loan by the second sixth [twelfth] month after the end of the loan cycle.

For eligible clients in treatment branches, the end of the loan cycle is computed starting 2 months after the expected last collection date; in control branches from the expected last collection date see Supplementary Appendix B for further details.

Next, we examine the likelihood that the loan was not fully paid in 12 months to quantify the proportion of borrowers who extended the loan by using at least one voucher.

Treated Dabi borrowers are 8. Similarly, we see a 5. Column 4 investigates the actual end of the loan cycle, defined as 12 months in the control and 14 months in the treatment branches.

Hence, by the end of the contract, the de facto default rate was significantly lower in the treatment branches. The remaining columns report the effects on the probability of not having repaid the full loan within 2, 6, and 12 months [columns 5 , 6 , and 7 ] after the end of the loan cycle as defined in column 4.

Eligible Dabi clients are 1. While imprecisely estimated, the effect is similar in magnitude to the default indicator [column 2 ] used by BRAC. Overall, the patterns imply that the flexible contract improved repayment among the eligible clients in the treatment branches, at least in the short run, while loan repayment rates were more similar in the treatment and control groups in the longer term.

The results so far demonstrate that repayment flexibility led to improvements in business outcomes and socio-economic status without an increase in the default rates for the Dabi clients, with much more modest and insignificant effects for the Progoti borrowers.

Viewed through the lens of our model, these findings provide some initial evidence of the mechanisms at play. The relatively large impact experienced by the Dabi clients is consistent with increased risk taking because of imperfect insurance markets and, possibly, credit rationing.

By contrast, the absence of discernible effects for Progoti either implies that these firms were unconstrained or that they face too much risk even with the vouchers due to other external commitments. In the latter case, the model shows that the flexible contract induces safer low-return investments, again owing to imperfect insurance, binding credit constraints, or an incompleteness in both markets.

To shed light on the channels, we now test more directly for the presence of insurance and credit rationing. According to our theory, repayment flexibility should increase risk taking if insurance markets are imperfect and the loan payment is the main outstanding obligation.

To examine this link empirically, we explore four pieces of evidence. First, an implication of greater risk taking is that some firms will flourish while others, if unsuccessful, may fail. The finding that treatment increases sales volatility [column 10 , Table 3 ] is supportive of this, at least for the sample of eligible Dabi clients.

To probe the idea further, we study the heterogeneity of the treatment effects. Average treatment effects in terms of business growth and household economic wellbeing may mask considerable heterogeneity that can tell us something more about whether the flexible contract induces risk taking, resulting in success as well as failure.

To explore this, we estimate the following quantile treatment effect QTE specification:. where Δ y i t is the change in the outcome of interest for individual i at survey t mid- or endline relative to the baseline and the rest of the parameters are defined as in equation 4 above.

One caveat to bear in mind is that, due to the small sample size, we lack the power to estimate precise treatment effects across the distribution. Figure 4 displays the results for the eligible Dabi clients.

The QTE estimates reveal substantial heterogeneity in the effects of the flexible contract. While we observe a positive impact on business asset value at any centile above the median Figure 4 A , the treatment effect at the lowest centile is negative although insignificant.

The pattern is even more striking when we study the QTEs on business revenues and household labour income Figure 4 B and C. While most treated clients raise their revenue and household income, those at the lower end of the distribution do worse relative to the control group.

As an alternative way of exploring the effects throughout the distribution, we also plot the cumulative distribution function CDF of log household income in Figure 4 D. This is consistent with repayment flexibility leading to greater risk taking among treated clients, causing some households in the treatment group to lose out relative to control while others do better.

By contrast, when we conduct the same analysis for the Progoti borrowers, we find no evidence of any heterogeneity.

Heterogeneity of treatment effects among Dabi borrowers: A business assets value; B business revenues annual ; C household income annual ; and D CDF of Log household income. Notes: The sample includes eligible Dabi borrowers.

Panels A—C plot QTEs estimated according to specification 5. Each specification controls for the survey wave. Values are in PPP USD. Panel D plots the CDF of log household income plus 1 in the treatment and control samples.

Second, we estimate the heterogeneity of the treatment effect with respect to the uncertainty of the local business environment. As implied by the model, the flexible contract should facilitate riskier investments more exposed to aggregate uncertainty in the case insurance constraints bind.

As an indicator of business uncertainty, we rely on the baseline data from the SME sample. Using this information, we calculate the average coefficient of variation CV of expected demand growth among SME owners within a cluster BRAC branch office and divide the clusters into two groups: those where the average CV of expected demand growth is high above median or low below median at baseline.

If the flexible contract helps eligible borrowers undertake riskier investments, we expect the effects to be larger in clusters with greater demand uncertainty.

Table 6 shows that this is indeed the case among the Dabi borrowers. Moreover, the impact on profits seems to be concentrated among borrowers located in clusters with higher demand growth uncertainty the interaction terms in columns 4 and 5 are large and positive though somewhat imprecise.

This implies that among the Dabi borrowers, repayment flexibility helped borrowers particularly in markets with high demand uncertainty at baseline. Importantly, the corresponding analysis for the Progoti clients shows no detectable heterogeneity. Notes: The table presents the heterogeneity of the treatment effects on key business outcomes of the eligible Dabi borrowers with respect to uncertainty of demand growth at baseline among local businesses.

demand uncertainty. Third, in addition to expectations about future demand, the realization of actual shocks should be particularly important for borrowers who take on more risk. To test this, we explore variation in local demand shocks caused by changes in agricultural productivity.

In addition, Bangladesh is one of the most climate-vulnerable countries in the world, with droughts and heavy floods having a strong negative effect on rice yields and subsequent income Khandker, ; Bandyopadhyay and Skoufias, ; Rahman et al. To capture sharp changes to rice productivity and thus to the local economy, we explore the occurrence of heavy floods during the growing season December to May of the most important rice variety, Boro.

To construct the shocks, we compute the rainfall distribution for a 25 km radius from the centroid of each branch separately over the period — A negative shock is proxied by a one standard deviation increase in rainfall within the 25 km buffer zone.

To match our mid- and endline survey, collected in May through August of and , we measure shocks in December to May in and in relative their historical distribution. Importantly, this implies that the extreme floods occur unexpectedly after the announcement of the flexible credit contract offer in September In Table 7 , we study the riskiness of the business activity by interacting the rain shock with the treatment indicator as well as adding an independent shock variable.

A negative coefficient on the interaction term implies that activities undertaken with access to vouchers were more sensitive to demand shocks as captured by the undesirable rainfall shock.

The effect of the shock itself should also be negative as it lowers overall demand. We have a negative and significant interaction term for business revenues, costs, and profits.

Specifically, the treatment effect on revenues is 38, USD PPP in the absence of the negative rainfall shock, while the impact is only 7, USD PPP and imprecisely estimated for borrowers exposed to the shock.

This is in line with the shock lowering sales in general. In treatment branches, the effect of the rainfall shock almost doubles. Similarly, the responsiveness is also sizable in terms of costs and profits. A similar pattern is observed for monthly profits, but the interaction term of treatment with the rainfall shock is imprecisely estimated at conventional levels.

Notes: The table presents the heterogeneity of the treatment effects on key business outcomes of the eligible Dabi borrowers with respect to the likelihood of having experienced an excessive rainfall shock.

The geographical area over which the rainfall amount was calculated corresponds to a 25 km radius around the branch where the firm is located.

All regressions control for the baseline value of the outcome, an indicator variable for the endline survey, district-by-survey year fixed effects, and flexible controls for the probability of rain.

Overall, the interaction effect with the negative rainfall shock entirely removes the positive impact of treatment on revenues, costs, and profits which in absence of floods is significantly greater among Dabi clients in the treatment group relative to control.

We also see a negative effect on the extensive margin, as fewer individuals are business owners in treated branches who experienced the negative rainfall realization. Together, these findings imply that Dabi clients with access to the flexible contract shift their activities to take on more demand-related risk.

Fourth, the theory is based on the idea that the flexible contract raises investments in illiquid and thus riskier business assets if the insurance market is incomplete. We begin by breaking down this effect for the Dabi borrowers into 6 different categories: tools and utensils, furniture, machines, vehicles, inventories, and buildings.

While Panel A of Table 8 shows that treatment and control were as likely to own an asset within each group, Panel B reveals that the aggregate value increased across the majority of categories.

Specifically, treatment increased the ownership of tools and utensils by 73 USD PPP [column 1 ], furniture by 57 USD PPP [column 2 ], machinery by USD PPP [column 3 ], and inventories by 1, USD PPP [column 5 ].

The point estimates for vehicles and buildings are negative but imprecisely estimated. Notes: The table presents the treatment effects on business assets of the eligible Dabi borrowers. Panel A reports estimates of the extensive margin likelihood of owning assets of each type , Panel B on the intensive margin monetary value of assets owned of each type.

In Panel C, the dependent variable is the number of distinct types of assets owned within each asset category, and in Panel D the outcome is the per unit value of assets of each type owned by the firm. In Figure 5 , we plot the percentage of the asset value that respondents reported they would lose in case of a rapid sale conditional on having a given type of asset.

While these findings need to be interpreted with some caution with data collected 5 years after the baseline survey and during the Covid pandemic , the evidence suggests that business assets in general are difficult to liquidate in this setting and, as such, investing in them entails substantial risk for small businesses.

Notes: The figure shows the liquidity of business assets owned by eligible borrowers Dabi or Progoti by category, and overall. The information comes from a phone survey that was conducted in May The figure plots the mean level for the percentage of value lost if a firm has to liquidate assets in 1 day as opposed to 1 month conditional on having any assets of a given type.

Returning to Table 8 , in Panel C we explore the variety of business assets held by the eligible Dabi clients by counting the number of different asset types within tools and utensils, furniture, machines, and vehicles. Finally, Panel D of Table 8 reports differences in terms of the unit value of the business assets held in each category.

Student loan borrowers have a number of options when the time comes to start repaying their loans. Federal student loans offer the most flexibility, while the choices for private student loans are limited. The best way for you to repay will depend on the kind of loans you have, how much you owe, and where you stand financially after graduation.

There are multiple repayment plans that you may be eligible for if you have federal student loans. One quick note: The Public Service Loan Forgiveness PSLF program forgives student loan balances for those who work for a government agency or a qualified c 3 nonprofit for at least months while also making months of direct student loan payments.

As of June , just 3. So be forewarned: Receiving loan forgiveness under the PSLF program is not an easy task. The White House announced the Saving on a Valuable Education SAVE plan in August and said up to 20 million borrowers could benefit.

The COVID moratorium on student loan interest and repayments ended on Oct. For one year after that date, borrowers who have trouble making their payments will not be considered delinquent, reported to credit bureaus, placed into default, or referred to debt collectors.

The answer to this question is different for every borrower. Other variables that come into play when making this decision include the amount of debt you owe and whether you plan to go back to school for a graduate degree at some point.

Under the PAYE, SAVE, IBR, and ICR plans, your monthly repayment amounts will change from year to year. Payment amounts are recalculated annually and based on your income and family size. Private student loans typically offer fewer choices for borrowers. These include:.

You might also consider refinancing your private loans if that would get you a lower interest rate. This can save you money on interest during the repayment term. There are several variables that determine what repayment plan s you might be eligible for, including your income and debt.

If you have a loan from a private lender such as a bank, contact the lender to discuss your options. If you have a federal loan, the U. There is a loan simulator tool on the Federal Student Aid website that can help you calculate your potential loan payment and see which plan might suit you best.

For federal student loans, you will automatically be enrolled in the Standard Repayment Plan once repayments begin. You can request a different repayment plan anytime. Payments can be fixed or graduated, providing greater flexibility in managing monthly financial obligations.

This extended timeframe can result in lower monthly payments, making it a suitable choice for those needing more financial flexibility. By extending their repayment period, borrowers can spread out their loan obligations over a more extended period, which can be helpful during financial uncertainty or career transitions.

While lower monthly payments can provide temporary relief, the extended timeline means that you will likely end up paying more in total interest over the life of the loan compared to a standard or graduated repayment plan.

Therefore, it is essential to weigh the benefits of lower monthly payments against the overall cost of the loan. Options for income-driven repayment plans include: Income-Based Repayment IBR : Caps payments at a percentage of discretionary income and forgives the remaining balance after 20 or 25 years.

The SAVE plan replaced the Revised Pay-As-You-Earn REPAYE Plan in The PSLF process requires careful adherence to specific criteria to ensure loan forgiveness. Borrowers must choose an income-driven repayment plan and work for a qualified employer while making the necessary payments.

One of the notable benefits of PSLF is that the forgiven amount is not subject to income tax. This program provides repayment flexibility for those dedicated to public service, such as teachers, nurses, government employees, and other non-profit workers, as it offers robust financial relief in exchange for dedicated contributions to society.

All these repayment options provide diverse choices for federal student loan borrowers impacted by the COVID pandemic. If you have any further questions about your repayment options or need additional information, visit the Federal Student Aid " Contact Us " webpage.

Relevant Links Federal Resources Federal Student Aid Website: Federal Student Aid This is the official site for managing federal student loans. It includes details about different repayment options, loan consolidation, and how to apply for financial aid. gov Website: StudentLoans.

gov This site also provides federal student loan information, including tools for estimating loan payments. Free Application for Federal Student Aid FAFSA Website: FAFSA Here, you can fill out the application for federal financial aid, which is the first step in qualifying for most types of financial assistance, including loans.

Repayment Calculators Repayment Estimator Website: Repayment Estimator This calculator estimates monthly payments based on different repayment plans. Loan Forgiveness Programs Public Service Loan Forgiveness PSLF Website: PSLF If you work in public service, you may be eligible for loan forgiveness after making qualifying monthly payments.

Teacher Loan Forgiveness Website: Teacher Loan Forgiveness Teachers serving in low-income schools or educational service agencies may qualify for loan forgiveness.

Always remember to consult with a financial advisor or counselor for personalized advice. Note : documents in Portable Document Format PDF require Adobe Acrobat Reader 5. Top Publications. Choosing a College. Paying for College.

Preparing for College. Get Ready MN College Savings Plan Self Loan Self Refi. Search for:.

Repayment Plans for Federal Student Loans Payment amounts are recalculated f,exibility and Credit card encryption Loan repayment flexibility your income and family size. Loah findings flxibility that lack of insurance is an important Repaymsnt for small firms but that a simple fpexibility product that increases repayment flexibility can be an effective tool for enabling enterprise growth. Diversion is an all-or-nothing decision, as we assume the lender claims all resources upon default. C90 - General. Search FIRST Sign in to the MLOC® tool, DLOC or OLOC Register for the next FIRST Webinar February 20, ALERTS. You'll also see loans you paid off or consolidated into a new loan.

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Student Loan Repayment Options - Sallie Mae Smart Option Student Loan®

After your separation or grace period, you'll be required to make principal and interest payments. There may be programs available for budget flexibility, such Among the many attractions of a Federal student loan is the flexibility it offers in repayment terms. You won't be required to begin repaying your Federal 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan: Loan repayment flexibility





















and TiroleLoam. F60 - General. Income-Driven Flexibillity IDR Plans SAVE Saving on a Valuable Loan application conditions This plan went into effect in August and is for Direct Loan borrowers only. I10 - General. F32 - Current Account Adjustment; Short-Term Capital Movements. In Supplementary Appendix A. and KristiansenE. We also link to studies on the timing of repayments in consumer mortgage products, where flexibility in choosing the monthly payments have been shown to smooth consumption Cocco, but also increase delinquency rates Garmaise, Article Sources. Barboni and Agarwal show that 3-month blocks of repayment holidays chosen in advance attracts financially disciplined clients and leads to higher repayment rates and higher sales. For example, if borrowers skipped the first two installments, the repayments started in month 3 and continued up to month 14 corresponding to a contract that provides a 2-month grace period. Figure 4 displays the results for the eligible Dabi clients. What if the payments are too high on my federal and private student loans? Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan Loan flexibility does not increase risk for banks Banks may worry that repayment rates will suffer; however, we find that offering a menu of After your separation or grace period, you'll be required to make principal and interest payments. There may be programs available for budget flexibility, such Biden Rolled out New Flexibility for Student Loan Payments This Week. Here's What to Know · Public sector workers should submit their paperwork One of the key aspects of flexible finance is the ability to adjust repayment schedules to accommodate changing financial situations. This means that borrowers Student loan repayment is considered available to employees when employers provide monetary support to employees for education they already Loan repayment flexibility
The U. Importantly, the corresponding analysis repaymen the Lon clients shows no detectable Loan repayment flexibility. We observe that repayemnt the pilot of a loan product with repayment Loan repayment flexibility attracted less Speedy loan options borrowers, with a greater desire to invest in riskier projects. Department of Education. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of fluctuations in income. News News Releases What does the FAFSA data delay mean for Minnesota students and families? So be forewarned: Receiving loan forgiveness under the PSLF program is not an easy task. Set up an online account with your servicer s so that you can better manage your loans. ORG Careers in Medicine for Students. Defer your student loans when you go back to school at least half-time or are selected for a program. Bandyopadhyay , S. Fixed repayment —Pay a fixed amount every month you're in school and during your separation or grace period. F1 - Trade. As implied by the model, the flexible contract should facilitate riskier investments more exposed to aggregate uncertainty in the case insurance constraints bind. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you EXIM Bank implements these flexibilities on a case-by-case basis for qualifying project finance transactions. Generally, extended grace periods or repayment After your separation or grace period, you'll be required to make principal and interest payments. There may be programs available for budget flexibility, such Student loan repayment is considered available to employees when employers provide monetary support to employees for education they already Following this, we sur- veyed a random sample of these borrowers. After our baseline survey, BRAC offered the flexible loan contract to eligible clients in 25 EXIM Bank implements these flexibilities on a case-by-case basis for qualifying project finance transactions. Generally, extended grace periods or repayment After your separation or grace period, you'll be required to make principal and interest payments. There may be programs available for budget flexibility, such Loan repayment flexibility
After our fllexibility survey, Loan repayment flexibility offered Loan repayment flexibility flexible Debt reduction through a side hustle contract to eligible clients in Loan repayment flexibility branches that we randomly selected. BRAC selected fifty branches for the flexkbility and credit officers in flecibility branch identified Dabi and Progoti borrowers repamyent they Loan repayment flexibility Lian for the flexible loan. For one year after that date, borrowers who have trouble making their payments will not be considered delinquent, reported to credit bureaus, placed into default, or referred to debt collectors. The entrepreneur pays the lender if the residual return after repaying exceeds the benefit from diverting all resources. D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement. Introducing repayment flexibility therefore represents a potential solution both to mitigate the mismatch between income realisation and repayments, and to boost investment. To probe the idea further, we study the heterogeneity of the treatment effects. It is important to be careful when extrapolating beyond our population of borrowers who had built good credit histories under the standard credit contract. On one hand, vouchers eliminate the need to save for the first repayment, freeing more funds for the initial investment. With the addition of a repayment burden, the entrepreneur also enters an informal risk-sharing scheme to cover consumption, reinvestment, and repayment in case of a return shortfall in period 2. Since our randomization was conducted at the branch office level, we cluster standard errors by BRAC branch office 50 clusters. Extended Repayment Reduced payments stretched over a longer term without consolidating. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Loan flexibility does not increase risk for banks Banks may worry that repayment rates will suffer; however, we find that offering a menu of Introducing repayment flexibility therefore represents a potential solution both to mitigate the mismatch between income realisation and Payments can be fixed or graduated, providing greater flexibility in managing monthly financial obligations. This extended timeframe can result Introducing repayment flexibility therefore represents a potential solution both to mitigate the mismatch between income realisation and Loan repayment flexibility
Eligible Dabi borrowers also receive Loan repayment flexibility informal transfers from their social LLoan with the point flexihility similar in size to the effect on Loan forgiveness for nurses BRAC Loan repayment flexibilityalbeit flexibioity so [column 5 ]. H - Public Economics. How long will this last? Overall, the patterns imply that the flexible contract improved repayment among the eligible clients in the treatment branches, at least in the short run, while loan repayment rates were more similar in the treatment and control groups in the longer term. May be more costly because of longer term and total interest paid. I11 - Analysis of Health Care Markets. If she invests in the illiquid technology, she avoids the intermediate period liquidation risk and fully benefits from the high-return project. I13 - Health Insurance, Public and Private. At the time of the request, the loan must be current not past due. Which Option Is Best? Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of 6. In the flexible repayment contract, the grace-period allows borrowers to start the loan repayment one period (or even more) ahead, which means that the loan There are several student loan repayment options you can choose from to pay off your debt. Learn what they are and how to pick the right one for you Loan flexibility does not increase risk for banks Banks may worry that repayment rates will suffer; however, we find that offering a menu of Introducing repayment flexibility therefore represents a potential solution both to mitigate the mismatch between income realisation and With a flexible repayment schedule, your monthly payment amount is based on your income and family size. This can help make your payments more Loan repayment flexibility

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