Got Loans?
New Law Could Decrease Your Monthly Payment or Provide Loan Forgiveness
Christine Malone
Issue date: 4/12/09 Section: News
If you have federal student loans and are preparing to graduate, you should familiarize yourself with the provisions of The College Cost Reduction and Access Act (CCRAA ). The Act has two provisions which may provide debt relief for law graduates with qualifying federal student loans.
The first provision is an "income-based" repayment option, which can limit the annual loan repayment for those with high educational debt and a comparatively low annual income. The option becomes available on July 1, 2009 and graduates in private and public sector employment can elect this form of repayment if they qualify. The second is a "public service loan forgiveness" program for graduates with federal student loans working in the broad category of public-service jobs. This program will forgive the remaining debt on such loans after 10 years of eligible public-service employment and qualified loan payments.
These two provisions are briefly explained below. This article does not address all issues related to the Act and is not intended to suggest these programs are right for you. Resources are provided below for further information about Act and its provisions.
Income-Based Repayment (IBR)
IBR is a new repayment option for federal student loans which goes into effect on July 1, 2009. Lenders typically give graduating students 60 to 90 days to select their repayment option, so IBR should be available to most May 2009 graduates. IBR is designed to keep monthly loan payments affordable by considering a borrower's current income. IBR loan payments are capped at 15% of discretionary income, but may be lower for borrowers with small earnings. In addition, after 25 years of qualifying payments in IBR, there are loan forgiveness provisions for any remaining debt.
All Federal Direct Loans (FDL) and federally guaranteed loans (FFEL) are eligible for IBR. This includes subsidized and unsubsidized Federal Stafford loans; Federal Grad PLUS loans (not Parent PLUS loans); and Federal Direct Consolidation loans. To learn what type of federal loans you have, visit the National Student Loan Data System at http://nslds.ed.gov or speak with your George Mason University financial aid counselor.
The first provision is an "income-based" repayment option, which can limit the annual loan repayment for those with high educational debt and a comparatively low annual income. The option becomes available on July 1, 2009 and graduates in private and public sector employment can elect this form of repayment if they qualify. The second is a "public service loan forgiveness" program for graduates with federal student loans working in the broad category of public-service jobs. This program will forgive the remaining debt on such loans after 10 years of eligible public-service employment and qualified loan payments.
These two provisions are briefly explained below. This article does not address all issues related to the Act and is not intended to suggest these programs are right for you. Resources are provided below for further information about Act and its provisions.
Income-Based Repayment (IBR)
IBR is a new repayment option for federal student loans which goes into effect on July 1, 2009. Lenders typically give graduating students 60 to 90 days to select their repayment option, so IBR should be available to most May 2009 graduates. IBR is designed to keep monthly loan payments affordable by considering a borrower's current income. IBR loan payments are capped at 15% of discretionary income, but may be lower for borrowers with small earnings. In addition, after 25 years of qualifying payments in IBR, there are loan forgiveness provisions for any remaining debt.
All Federal Direct Loans (FDL) and federally guaranteed loans (FFEL) are eligible for IBR. This includes subsidized and unsubsidized Federal Stafford loans; Federal Grad PLUS loans (not Parent PLUS loans); and Federal Direct Consolidation loans. To learn what type of federal loans you have, visit the National Student Loan Data System at http://nslds.ed.gov or speak with your George Mason University financial aid counselor.
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Virginia Beach Movers
posted 5/27/09 @ 10:42 AM EST
This could really help out a lot of people with their loans. Of course not everyone will be eligible but hopefully it will ease the strain of debt on students with loans. (Continued…)
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