Thursday, June 25, 2009

Possible relief for school loans

According to an article in the Sunday, June 21, 2009 Wall Street Journal section of the Denver Post, some folks will be eligible for lower loan payments on their student loans. If a college graduate has any of the following loans:
  • Stafford
  • Graduate PLUS
  • Consolidation loan made under the William D. Ford Federal Direct Loan program
  • Consolidation loan made under the Federal Family Education Loan program
they will be able to get lower loan payments starting on July 1st as part of the Income Based Repayment Plan. Any loans in default, parent PLUS loans, or consolidation loans including a parent PLUS loan do not qualify. Under this plan, the annual loan payments will be 15% of the borrower's gross income and 150% of the federal poverty income level (which depends on family size and state of residence). The IBRP will take that 15% amount, divide it by 12, and that'll be your monthly loan payment. If you make less than 150% of the federal poverty income level, you pay nothing until your salary increases. While this plan does extend the life of your student loan, at least it keeps you in good standing. To enroll in the plan, contact your loan lender.

Also of note is that after 25 years of qualifying payments, the principal loan balance may be forgiven. I know that might sound useless, but that'd be a nice payment not to have to make if you're also trying to support a family or care for elderly loved ones.

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