The first program is called income based repayment or IBR. This option is for student loans and can help to reduce your payments to the place where they are affordable. That means that some people with low incomes will not have to make a payment until their income increases and that nearly everyone will qualify for payments that are less than ten percent of their income. Only those with incomes over 60, 000 per year will have to pay more than ten percent of their income on student loans.
If you are enrolled in these programs, and still have debt after twenty-five years of payments, the debt is then forgiven. Time that your loan is in deferment or when you are not required to make payments on the student debt are also included in the twenty five year period required for debt forgiveness.
In addition, if your required payment does not pay even the interest on your student loan, that interest will be paid by the government on your behalf.
Your student debt must meet certain criteria, so be sure to read the government website for more information and to see if you qualify.
The second program is designed for persons who work for non-profit or government organizations. This program offers forgiveness for student loans that are still outstanding after you have worked for a qualifying employer and paid on the loan for ten years.
Examples of qualifying employers include government agencies and 501(c)(3) nonprofit agencies. Again you will need to check to see if your employer qualifies you for this program. State, local, tribal and federal organizations do qualify.
The law is retroactive, so payments you have made since October 2007 will count toward the ten year time frame. Debts could be forgiven by October 2017 for some workers. This program can also be combined with the IBR.
Stafford loans, grad plus loans and consolidated loans all qualify for this program as long as they are included in the direct loan program. Other student debt must be switched from the Guaranteed loan program to the Direct Loan Program in order to qualify for this benefit.
Graduates that are still using the standard ten year payback plan may feel that they are drowning in debt. Making the switch to one of these programs can lower your monthly payments and allow you to finally see the light at the end of the tunnel. By keeping student loan payments current there will come the day when your student debt has finally been paid in full.
Dawn Enstruthe writes for Ginko Financial which is a website containing details on ways to consolidate student loans and low cost business debt financing.
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