New student loan repayment program goes into effect July 1st
June 29, 2009 by AlumniUnit ©2010
Those drowning in student loan debt may be able to get some relief with the aid of a new program. Starting this week, anyone with a federal student loan can apply for a new Education Department program, which caps monthly payments based on income and which forgives remaining balances after 25 years. Those agreeing to public service work could have loans forgiven after 10 years.
Eligibility for income-based repayment is determined by a person’s income and loan size. A calculator at http://www.ibrinfo.org can help borrowers determine their eligibility for the plan, which becomes available Wednesday.
The program stems from the College Cost Reduction and Access Act, signed in 2007, which authorized the creation of an income-based repayment plan for some types of loans.
Payments would amount to less than 10 percent of income for most of the estimated 1 million people expected to enroll, experts say. Payments would never exceed 15 percent of any income above about $16,000 a year (or 150 percent of the poverty level). Those who earn less than $16,000 would not have to make any monthly payments.
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