Obtaining Student Loan Help Through Government Programs
A new federal program starting in the fall offers hope and relief to millions of students and graduates that have major educational debts, in other words, you will be able to get student loan help. As of July 1, if you have federal loans, you can ask the government to place limit your payment amount to 15% of your income. This is a new income based program that is being offered to those with debt.
For the majority of borrowers, their monthly payment will be the 15% difference of the budget allowance, set by the government, and their current income. If your income falls within one and half times the poverty level, chances are you won't have to pay anything.
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.
Programs based on income are nothing new but do not confuse this program with those offered in the past. To take advantage of the new program, be sure to only apply for federal student loans. Always compare loan rates and the like before deciding on the loans to accept. If you are no longer in school, get in touch with your lender to see if they offer the new program.
Before applying for the income based repayment program, consolidate your loans with a federal program. Since Private Lenders do not offer the program that part is highly important. It is going to be up to you to prove that you followed the guidelines of the program in order to have the final amount forgiven after the 10 or 25 year period is over so keep accurate records. Once the payment period has expired, you will also have to apply for the forgiveness portion.
There are a few things that you should be aware of with this program. If your monthly payments are so low that they don't cover the interest, the amount of your loan will continue to grow until you qualify to have it forgiven. Taxes may have to be paid on the forgiven amount unless you work in the public service arena. If your student loans are in default, you will not qualify.
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.
Finally, if your income is high enough that your loans are less than 15% of your income, regardless of what other debt you may have, you won't qualify either.
If you think that all this fine print will disqualify you, don't worry. There are several groups who are lobbying at this time to have improvements made to the program. Congress is already looking at making changes.
For the majority of borrowers, their monthly payment will be the 15% difference of the budget allowance, set by the government, and their current income. If your income falls within one and half times the poverty level, chances are you won't have to pay anything.
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.
Programs based on income are nothing new but do not confuse this program with those offered in the past. To take advantage of the new program, be sure to only apply for federal student loans. Always compare loan rates and the like before deciding on the loans to accept. If you are no longer in school, get in touch with your lender to see if they offer the new program.
Before applying for the income based repayment program, consolidate your loans with a federal program. Since Private Lenders do not offer the program that part is highly important. It is going to be up to you to prove that you followed the guidelines of the program in order to have the final amount forgiven after the 10 or 25 year period is over so keep accurate records. Once the payment period has expired, you will also have to apply for the forgiveness portion.
There are a few things that you should be aware of with this program. If your monthly payments are so low that they don't cover the interest, the amount of your loan will continue to grow until you qualify to have it forgiven. Taxes may have to be paid on the forgiven amount unless you work in the public service arena. If your student loans are in default, you will not qualify.
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.
Finally, if your income is high enough that your loans are less than 15% of your income, regardless of what other debt you may have, you won't qualify either.
If you think that all this fine print will disqualify you, don't worry. There are several groups who are lobbying at this time to have improvements made to the program. Congress is already looking at making changes.
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