Thursday, July 2, 2009

College Cost Reduction Act – Income Based Repayment and Forgiveness of Student Loans

For everyone with mounds of student debt, and even those with just a little student debt, today there might be some relief and assistance.

Last year Congress passed the College Cost Reduction Act, which put into place the Income-Based Repayment (IBR) plan with a special provision on loan forgiveness for people who work in public service.

IBR is a new way to make your federal student loan payments more manageable. It can help borrowers keep their loan payments affordable with payment caps based on their income and family size. For most eligible borrowers, IBR loan payments will be less than 10 percent of their income - and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.

If you're a teacher or work in government or at a nonprofit (501(c)(3)) organization, you might qualify for a new type of public service loan forgiveness after 10 years of eligible payments and employment. Public Service Loan Forgiveness is a new program for federal student loan borrowers who work in qualifying jobs. Under this program, any remaining debt will be forgiven after 10 years of eligible employment and qualifying loan payments. During those 10 years, the IBR can help keep your loan payments affordable.

If you have federal student loans be sure to check to see if they qualify under these new programs!

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