Today’s helpful topic of helpfulness, since it’s been on my mind: student loan assistance.
Student loans suck no matter how much you owe or earn, even when you are doing everything in your power to make it easier. But it alarms me that some people might not know about some of the programs that are out there that they can take advantage of. So, since I’m currently doing a bunch of stuff to knock down the ridiculous amount I pay a month on my student loans, I figure I should share.
1: Income-Based Repayment Plan – The requirements for this one are that your student loans are post-2007, your loans are not private and that you’re not making buttloads of money relative to the amount you owe. You have to file an application, and if you’re approved (which did take like four months for me; I had to put my loans in deferment for a couple of months while I waited), then IBR cuts your monthly payment down to 15% of your annual wages beyond $18,000 (assuming you’re single; having a spouse or kids changes the equation). So you know, that means most people are probably qualified.
Furthermore, if you are on this program and still paying on your loans after 25 years, your remaining debt will be forgiven. (But you do have to pay a tax on the forgiven amount). And, depending on your loan types, the government might even cover some of your monthly interest.
You have to submit annual documentation to track changes in your financial status, but it’s worth the hassle.
Extras: Obama’s new act will change this so it’ll be knocked down to 10% instead of 15%. Plus, it’s going to open up IBR so that at least some people who took out student loans before 2007 can qualify.
One word of warning on this: it’s possible that the amount you have to pay under IBR can be lower than your monthly interest accumulation. In this case, you do accumulate interest, so keep an eye on that because if you later come off of IBR, you could end up owing more than you did to begin with.
2: Teacher Loan Forgiveness – Some teachers can get at least a fair chunk of their Stafford Loans forgiven after five years of teaching.
3: Perkins Loan Forgiveness – If you work in certain public service fields (nursing, law enforcement, teaching, military, family services, etc.), you can get a percentage of your Perkins Loans cancelled for each year you work.
4: Public Service Loan Forgiveness – If you are on IBR and you work in a public service position (teaching, law enforcement, fed, state or local government organizations, non-profit organizations, etc.), you can have your remaining loans forgiven after ten years of employment and payment. This one is retroactive—that is, you can apply for it at any time, and it counts even payments you’ve already made under the IBR program.
PS: ‘non-profit’ includes the vast majority of schools and universities.