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.

If you are in a public service job, after 10 years of paying on your loans through the income based program, the rest of your debt will be erased. For those who are not in public service jobs but stay current on the income base payments for 25 years will have their debt forgiven as well.

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.

As with any program, there are some consequences involved. If your payments are so low that the interest isn’t even covered, the amount of your debt will grow until you reach the time that you can have it forgiven. You may have to taxes on the forgiven amount as well unless your career is in the public service field. If any of your loans are in default, you will not qualify for the program.

Types of loans not covered under the new program include parent, private, signature or alternative loans.

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.

If you think that all this fine print will disqualify you, don’t worry. There are several groups who are lobbying at this time to have improvements made to the program. Congress is already looking at making changes.

Student loan refinancing may be the ideal way to get our of debt. Get help to refinance student loans at Pay-Off-Student-Loan.com

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