How does loan student loan repayment work in the US?
Here we use a system that the loan is tied up in our IRD, and once you start earning over 19,000 p/a, you must change your tax code so that loan deductions are paid back BEFORE you ever see that money. The repayments are exponential, so the more you earn, the more you pay back each pay cycle.
It is interest free unless you leave the country. If you come back, then you are expected to pay back the interest accrued for that period.
I think it works well
So, there are 6 or so federal plans - and I can’t speak in private plans - income driven is basically 10% of your discretionary income (wages minus 1.5x poverty level) for 20-25 years (can’t recall the exact length) and the rest gets forgiven. The revised income driven is the same but it’s 20% of discretionary income.
Standard plans are 10 years or 30 years for extended which are amortized like a normal loan. Then there are standard and extended graduated plans which are for 10 and 30 years that start small and then exponentially increase as you get closer to pay off period. Usually increases every two years.
Interest is set by federal government when you take out loans. No credit checks or anything. My interest rate averages to about 6.5%.
There are of course public forgiveness plans - so if you work as a teacher, in government, for non-profits, etc your loans will be forgiven after you make 120 payments.