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New Repayment Method for Student Loans

P: 6/17/2009 8:28:13 AM
Hudson_Hawk Ideal Rock Total Posts: 4,499 Last Post: 11/23/2009 Member Since: 11/2/2006	Interesting read for those of us struggling with student loans http://www.boston.com/business/personalfinance/managingyourmoney/archives/2009/06/new_repayment_o.html New repayment option on student loans by Jill Boynton There's good news on the horizon for those with federal student loans. The goverment is introducing a new income-based payment program on July 1st. The timing of this program couldn't be better - new college graduates are coming into a very poor job market. With an unemployment rate currently hovering around 9 percent there are plenty of college graduates without jobs, or forced to accept low-paying jobs, faced with student loans averaging $22,000. And they don't have much time to line up work - borrowers must begin to repay their federal loans within 6 months of graduation. If you are unemployed you can apply to defer your payments for up to 3 years. But what if you have a job, but not a lot of income? Under the Income-Based Repayment plan (IBR) your payments are capped to no more than 15% of discretionary income, an amount that is based on the federal poverty guideline. "Discretionary income" is defined as the difference between adjusted gross income and 150 percent of the federal poverty line that corresponds to your family size and the state you live in (from www.finaid.org). This program applies to anyone with federal loans: the Stafford, Grad Plus and federal consolidated loans. Your loans must be in good standing. If your reduced payment doesn't cover the interest accruing on the loan the unpaid interest will be added to the balance. And no matter how much you have repaid, the loan is forgiven after 25 years as long as you've made all of your payments. This program is intended to encourage college grads to accept jobs in low-paying fields, but has the unintended benefit of helping out during this difficult economic time. It will enable those who otherwise might have defaulted on their loan, creating a poor credit history, to keep the loan in good standing until income goes up in the future. You'll need to contact your lender to enroll in the program. There is a lot more information about the program at www.ibrinfo.org. That's Mrs. Hudson_Hawk to you... Over and out.
Posted: 6/17/2009 8:28:13 AM

There are 4 replies to this message. There are 4 replies on this page.

P: 6/17/2009 10:40:08 AM
mayachel Ideal Rock Total Posts: 1,278 Last Post: 11/23/2009 Member Since: 3/2/2008	Interesting. Any idea if it applies to graduate school loans too?
Posted: 6/17/2009 10:40:08 AM

P: 6/17/2009 10:44:22 AM
neatfreak Ideal Rock Total Posts: 13,467 Last Post: 11/24/2009 Member Since: 2/17/2007	Date: 6/17/2009 10:40:08 AM Author: mayachel Interesting. Any idea if it applies to graduate school loans too? If it is a stafford or other federal loan I don't see why it wouldn't... ETA: I just looked and as long as your loan is one of the qualifying types it doesn't matter if it was for undergrad or graduate school.
Posted: 6/17/2009 10:44:22 AM

P: 6/17/2009 11:07:54 AM
mayachel Ideal Rock Total Posts: 1,278 Last Post: 11/23/2009 Member Since: 3/2/2008	Thanks for checking NF! That is awesome.
Posted: 6/17/2009 11:07:54 AM

P: 6/17/2009 2:23:44 PM
SarahLovesJS Ideal Rock Total Posts: 4,973 Last Post: 11/21/2009 Member Since: 2/3/2008	Oh this will be nice, yay! Mrs. S<3JS
Posted: 6/17/2009 2:23:44 PM

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