Sign On to Affordable Student Loan Repayment Options Now While You Still Can

Currently, the federal student loan program offers generous affordable repayment options that should leave virtually nobody starving or facing default. These programs apply to federal student loans and may not apply to “private” loans. These programs have not been widely advertised. Do not ignore your federal student loans. Default is not necessary.

Income Based Repayment or IBR is a plan that reduces monthly payments to no higher than 10 or 15 percent of current “discretionary” income, depending on when the loan was created. For very low income grads, the monthly payment may bottom out at zero. The application process is free.

To qualify, reduced payments under the program must be less than payments under the standard ten year plan. Once enrolled, you must renew your application every year. Payments remain at the same percentage of income, but never exceed the standard plan. Payments are extended for 20 to 25 years. Then, the balance is forgiven and the debt goes away. There is one important catch at the end: the amount of debt forgiveness may be taxable as income.

The above chart comes from the official site which also says this:

Under all four plans, any remaining loan balance is forgiven if your federal student loans aren’t fully repaid at the end of the repayment period. For any income-driven repayment plan, periods of economic hardship deferment and periods of repayment under certain other repayment plans will count toward your total repayment period. Whether you will have a balance left to be forgiven at the end of your repayment period depends on a number of factors, such as how quickly your income rises and how large your income is relative to your debt. Because of these factors, you may fully repay your loan before the end of your repayment period.

These payment plans were largely created or expanded by Barack Obama and could be eliminated at any time. There is no guarantee these programs will remain in place for much longer. Remember, unlike most loans, student loan debt cannot be expunged in bankruptcy.

Typically, when the government changes its rules in programs like these, those who have already contracted stay on the program. Get in while you can. Call your student loan provider today, or visit the official website for more information and apply here.