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Ditch Your Student Loan Debt Gremlin

Posted By Sarah

Major changes are coming July 1, 2009 for student loans. You could have lower payments based on your income and your family situation, and your loan could be forgiven completely under certain circumstances.

There's a great video that explains what happening here:

You can also find more detailed information from the Project on Student Debt.

In a nutshell, the first of July is an important date for people with federal student loans: it's when interest rates and other terms change each year. On July 1, 2009, Income-Based Repayment becomes available for the first time; Pell grants get bigger; and the interest rates on new Subsidized Stafford loans and existing variable-rate loans go down.

The main news we're happy about is that Income-Based Repayment Becomes Available on July 1. Income-Based Repayment (IBR) can make your loan payments easier to afford by keeping your monthly payments at a limited level based on your income and family size. Nearly all federal loans made to undergraduate and graduate students are covered. If you work in a government, nonprofit, or other public service job, your federal student loans could be forgiven (you wouldn't have to pay any more) in as little as 10 years of IBR or other qualifying payments. More income-based loan repayment information is available at IBRInfo.org at  http://www.ibrinfo.org/.

Some key points in the repayment calculations:

*The "marriage penalty" in the IBR formula was corrected 
*Although you have to sign up for 25-year income-contingent repayment, you can change your plan if your circumstances change or if you just decide that you want to pay off your loan more rapidly, you may do so.

You may be better off financially than you realized. What a nice summer gift!

Category: Mortgage & Loans

6/17/2009

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