Helen Writings
In an effort to provide relief, or student loan help, and some hope to students and graduates alike, the government has instituted a new program that will be available this fall. Beginning July 1, actually, a new income based repayment program will be available. If you qualify, you can request that your payments total no less than 15% of your income.
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.
Complete and total forgiveness of your student loans after the repayment period expires is offered through this program. The time that you will have to pay varies from 10 years, for those in public service jobs to 25 years for those with low income. As long as you abide by the rules and make your payments on time, you will eventually be able to apply to have the remainder of the loan forgiven.
In order to take advantage of the program, limit the amount of money you borrow to federal student loans. As with any loan, make sure to research the loans offered. If you are no longer in school, contact your lender to apply for the income based program. Make sure to apply for the correct program and not one that sounds the same. Some of the similar sounding programs are referred to as Income contingent repayment or income sensitive repayment.
If you are in a public service job, make sure to consolidate your loans and then apply for the program. Private lenders will not offer this program to you. You will need to keep records of your payments and the like so that at the end of the 10 year period, you can apply for the forgiveness portion of the loan program. You are going to have to provide proof that you followed all the rules in order for your loan to be forgiven.
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.
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 best option for you. Get the help you need to refinance student loans at Pay-Off-Student-Loan.com
Tags: debt, loan, Personal, personal finance, student loan, student loan help
Posted in Personal · November 18th, 2009 · Comments (0)
Today’s economy has hit Americans very hard. Many are struggling to get by let alone pay student loans. Before you get behind on your student loan payments, there are several options that you may qualify for with student loan deferment programs. Some of those options include payment relief, forbearances and deferments.
Contact your lender to find out if your situation qualifies for a deferment. If you are suffering a hardship like unemployment or if you have started school, you might qualify. Keep in mind that depending on the type of loans you have, you might be responsible for the interest that accrues during the deferment period.
Deferments for those who is active duty or who are called to active duty is offered with lenders. The deferment can also be extended to cover the time of demobilization.
If you are currently enrolled in school at least part time and you are a reservist or were a reservist who is called back to duty, a deferment is offered to you that will continue for- months from the conclusion of the active duty status or reenrolling in school.
If, according to federal regulations, you are experiencing economic hardships, a deferment may be available to you for up to 3 years if the loan is a FFEL, Federal Perkins or Direct Loan. Regardless, you need to contact your lender to find out if you qualify.
Having your payment amounts reduced or postponed is called forbearance. This only happens for a certain amount of time. If you do not qualify for a deferment you may qualify for forbearance. The difference between a forbearance and deferment is that during the forbearance, it doesn’t matter what kind of loan you have, the interest still grows and you do have to pay it. There is a possibility that the forbearance will last for up to 3 years total. As with deferments you do have to apply for it and continue to make payments until it is approved.
Those with Plus Loans can apply for deferments or forbearances like anyone else. Those with Plus Loans must also meet the same standards. With Plus Loans, you aren’t required to pay the interest during the postponement or reduction period; but, if you don’t pay it, it will compound which means you will owe more.
You can choose to change repayment plans if you feel that another one would work better for you. With the FFEL you are allowed to change your payment plans one time within a 12 month time period. With Direct Loans you can change plans several times as long as the new plans repayment period is longer than the one you are on at the present time.
A private student loans consolidation can help you pay off student loan quicker than you imagine. Find out at Pay-Off-Student-Loan.com
Tags: debt, debt deferment, debt forbearance, loan, Personal, personal finance, student loan, student loan deferment, student loan forbearance
Posted in Personal · November 17th, 2009 · Comments (0)