With the hopes of providing student loan help to current students and graduates, the government has initiated a repayment program based on income that became effective July 1. If you meet the required criteria, you can ask to have your monthly payments lowered to no less than 15% of your income.

For the majority of borrowers, their monthly payment will be the 15% difference of the budget allowance, set by the government, and their current income. If your income falls within one and half times the poverty level, chances are you won’t have to pay anything.

This program offers something that others don’t. That is complete forgiveness of your debt after a certain time period depending on your job or income level. Qualifying for the program based on your income will mean that after 25 years of paying on your debt, the rest of it will be forgiven. After 10 years of paying, if you are in a public service position, the debt will be forgiven. Both require that you stay current on your payments.

Programs based on income are nothing new but do not confuse this program with those offered in the past. To take advantage of the new program, be sure to only apply for federal student loans. Always compare loan rates and the like before deciding on the loans to accept. If you are no longer in school, get in touch with your lender to see if they offer the new program.

If your loans are through a private lender, chances are they will not offer this program to you. So, before you apply for the program, locate a federal consolidation loan program to combine your loans. Once you qualify, keep track of the payments you make and any other necessary information. When the repayment period is over, you are going to have to prove that you followed the guidelines in order to have your loans forgiven.

There are a few things that you should be aware of with this program. If your monthly payments are so low that they don’t cover the interest, the amount of your loan will continue to grow until you qualify to have it forgiven. Taxes may have to be paid on the forgiven amount unless you work in the public service arena. If your student loans are in default, you will not qualify.

Types of loans not covered under the new program include parent, private, signature or alternative loans.

Finally, if your income is high enough that your loans are less than 15% of your income, regardless of what other debt you may have, you won’t qualify either.

Congress is being lobbied by several groups at this time to make changes to the loan program. Congress is considering modifying the law in regards to the program. If you cannot apply for the program at this time, there is a chance that in the future you will be able to.

Student loan refinancing may be the ideal way to get our of debt. Get help to refinance student loans at Pay-Off-Student-Loan.com

Related Blogs

• Related Blogs on Personal Finance
• Personal Finance Tips : How To Get A Credit Card If You Have Bad …