Student Loan Forgiveness: What You Need to Know
Why your spouse's income could trip you up
Are there any catches to the government's new income-based student loan repayment plan? Sure. Edie Irons, communications director for the nonprofit Project on Student Debt, says fine print in the new law could trip up some debt-burdened grads.
For example, you'll have to be careful to make sure you're applying for the new plan and not the older and less attractive but similar-sounding plans offered by the government and some lenders. The key phrase is "income-based repayment." Forget about "income contingent repayment" and "income-sensitive repayment," Irons says.
Also, if your income is so high that your federal debt payments make up less than 15 percent of your disposable income—even if you have other big bills, such as medical debts or private educational loans—you probably won't qualify for the program.
Plus, because the law currently calls for the government to consider a family's entire income, those with working spouses may have to make higher payments, even if their spouses also have big educational debts.
And anyone hoping for forgiveness on public service loans had better keep excellent records, since under the current law, when the 10 years are up, the burden will be on the student to prove that he or she made all the payments on time and never exceeded the income limits. Irons and her group want Congress to eliminate some of these sticking points. But even as it is, she says, the new plan "will be an enormous help to many thousands of borrowers."
Reader Comments
10 Year Student Loan Forgiveness
I am a little confused by some of the comments made in regards to this article. It would appear that several people did not actually read the article. Also take the time and do some research on the 10 year student loan forgiveness program. If you are in public service or work for a non-profit you may qualify. This is a great program for students like myself who have borrowed over $90,000 in student loans and want to work in government. Check out http://www.ibrinfo.org for details on the 10 year student loan forgiveness program and more.
To address some other off topic statements I personally I think student loans should not be effectively immune to bankruptcy since that results in indentured servitude with the U.S. government and education lenders for education (student loans can be discharged in bankruptcy but the requirements are very difficult). That would address issues raised by others commenting about disability and more, but was not necessarily the topic of the article.
Need Solutions
The student loan repayment options don't seem to help most people/families in these difficult economic times. I have
contacted my senators asking for help.
If anyone has solutions for these comments, please post.
What can you do if you are unemployed or disabled and can't make payments and the interest is compounded?
Right now, I would not advise any student to take loans.
Go longer. Take Work-Study. Apply for all of the grants
and scholarships possible.
STUDENT LOAN FORGIVEN
I applied for a guarantee student loan back during the early eighties and was granted $10,000, I became totally disabled during 1994 which I'm unabled to pay back..I need a original copy to find out if anything in fine print mention forgiving or other ways that'll help me dispose of this loan.
Sincerely,
Horace Nichols
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