With the hopes of providing student loan help to current students and graduates, the government has initiated a repayment program based on income that became effective July 1. If you meet the required criteria, you can ask to have your monthly payments lowered to no less than 15% of your income.
If your income is less than one and half time the poverty level you will not have to pay anything on your student loans. For others who qualify for the program, their payment will be 15% of the difference between the budget allowance and their income.
If you are in a public service job, after 10 years of paying on your loans through the income based program, the rest of your debt will be erased. For those who are not in public service jobs but stay current on the income base payments for 25 years will have their debt forgiven as well.
In order to take advantage of the program, limit the amount of money you borrow to federal student loans. As with any loan, make sure to research the loans offered. If you are no longer in school, contact your lender to apply for the income based program. Make sure to apply for the correct program and not one that sounds the same. Some of the similar sounding programs are referred to as Income contingent repayment or income sensitive repayment.
If your loans are through a private lender, chances are they will not offer this program to you. So, before you apply for the program, locate a federal consolidation loan program to combine your loans. Once you qualify, keep track of the payments you make and any other necessary information. When the repayment period is over, you are going to have to prove that you followed the guidelines in order to have your loans forgiven.
There are some downsides to the program though. For instance, if you qualify but your payments don't cover the interest portion of your loan, your debt will continue to increase until you reach the forgiveness period. There is a chance that you will have to pay taxes on the forgiven amount if you are not in a public service job. Also, if you have defaulted on your loans, the program will not lower your payments. If you have gone into default, you will not qualify for the program at all.
There are several types of loans that the program does not cover. These loans include private, alternative or signature loans. Parent loans are not covered either.
If your monthly student loan payments total less than 15% of your income, you will not qualify for the program.
Certain groups are lobbying Congress at this time to make changes to the loan program. So, if you don't qualify now, you may qualify later. - 31377
If your income is less than one and half time the poverty level you will not have to pay anything on your student loans. For others who qualify for the program, their payment will be 15% of the difference between the budget allowance and their income.
If you are in a public service job, after 10 years of paying on your loans through the income based program, the rest of your debt will be erased. For those who are not in public service jobs but stay current on the income base payments for 25 years will have their debt forgiven as well.
In order to take advantage of the program, limit the amount of money you borrow to federal student loans. As with any loan, make sure to research the loans offered. If you are no longer in school, contact your lender to apply for the income based program. Make sure to apply for the correct program and not one that sounds the same. Some of the similar sounding programs are referred to as Income contingent repayment or income sensitive repayment.
If your loans are through a private lender, chances are they will not offer this program to you. So, before you apply for the program, locate a federal consolidation loan program to combine your loans. Once you qualify, keep track of the payments you make and any other necessary information. When the repayment period is over, you are going to have to prove that you followed the guidelines in order to have your loans forgiven.
There are some downsides to the program though. For instance, if you qualify but your payments don't cover the interest portion of your loan, your debt will continue to increase until you reach the forgiveness period. There is a chance that you will have to pay taxes on the forgiven amount if you are not in a public service job. Also, if you have defaulted on your loans, the program will not lower your payments. If you have gone into default, you will not qualify for the program at all.
There are several types of loans that the program does not cover. These loans include private, alternative or signature loans. Parent loans are not covered either.
If your monthly student loan payments total less than 15% of your income, you will not qualify for the program.
Certain groups are lobbying Congress at this time to make changes to the loan program. So, if you don't qualify now, you may qualify later. - 31377
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