A Government Option For Obtaining Student Loan Help
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.
Complete and total forgiveness of your student loans after the repayment period expires is offered through this program. The time that you will have to pay varies from 10 years, for those in public service jobs to 25 years for those with low income. As long as you abide by the rules and make your payments on time, you will eventually be able to apply to have the remainder of the loan forgiven.
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.
As with any program, there are some consequences involved. If your payments are so low that the interest isn’t even covered, the amount of your debt will grow until you reach the time that you can have it forgiven. You may have to taxes on the forgiven amount as well unless your career is in the public service field. If any of your loans are in default, you will not qualify for the program.
Types of loans not covered under the new program include parent, private, signature or alternative loans.
If your monthly student loan payments total less than 15% of your income, you will not qualify for the program.
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.
Student loan refinancing may be the best option for you. Get the help you need to refinance student loans at Pay-Off-Student-Loan.com