Student Loan Help – Getting the Assistance From 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 those who qualify, the average payment will be 15% of the difference between the base budget allowance and their current income. Then again, you may not have to pay anything if you fall within the one and half times the poverty level.
This program offers something that others don’t. That is complete forgiveness of your debt after a certain time period depending on your job or income level. Qualifying for the program based on your income will mean that after 25 years of paying on your debt, the rest of it will be forgiven. After 10 years of paying, if you are in a public service position, the debt will be forgiven. Both require that you stay current on your payments.
Most lenders have offered income based repayment for years but don’t mistake this for the government program now in place. Make sure to only apply for federal loans in order to take full advantage of the program. When you are looking into obtaining student loans, make sure to comparison shop. Contact your lender to apply for the program if you are no longer attending school.
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 payments total less than 15% of your income, you will not qualify for the program 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.
Student loan refinancing may be the way out of debt. To refinance student loans, visit Pay-Off-Student-Loan.com
