A Government Option For Obtaining Student Loan Help

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.

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.

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.

There are some downsides to the program though. For instance, if you qualify but your payments don’t cover the interest portion of your loan, your debt will continue to increase until you reach the forgiveness period. There is a chance that you will have to pay taxes on the forgiven amount if you are not in a public service job. Also, if you have defaulted on your loans, the program will not lower your payments. If you have gone into default, you will not qualify for the program at all.

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.

Certain groups are lobbying Congress at this time to make changes to the loan program. So, if you don’t qualify now, you may qualify later.

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