<p>"Repaying a student loan could soon be a little less painful. Starting this week, anyone with a federal student loan can apply for a new Education Department program, which caps monthly payments based on income and which forgives remaining balances after 25 years. Those agreeing to public service work could have loans forgiven after 10 years."</p>
<p>Just sent the link to my DS who doesn’t earn a huge amount of money.</p>
<p>This is great news. Too bad programs like these don’t exist for people who have PRIVATE loan debt.</p>
<p>My biggest question…if a student has this “low income” option, does the loan balance continue to accrue interest and get shifted ahead years…or what? I suggested to my kid that he look into the lower repayment option BUT also consider paying the interest that is accruing. Otherwise that could really add up.</p>
<p>I can’t help but wonder who is going to be stuck paying the bills when the students’ loans are forgiven after 10 years if they go into public service or after 25 years for the general public. Does this worry anyone else? Why would anyone pay their student loans if they were just going to be forgiven eventually?</p>
<p>That calculator on there does not work. We were using it to figure out my sister’s info and what she would pay and every time you click “calculate” it gives you a different estimate even if you haven’t changed any of the numbers. She makes about 15k a year and her monthly payments ranged from $20
/month-$500/month. A few times it even told her she wouldn’t qualify. However, she should qualify for $0 because she is <150% of povery level.</p>
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The report I saw said after 25 years of payments. I don’t think you can just default on your loan and then 25 years later it magically disappears. You have to pay based on your income during that time.</p>
<p>I hope this doesn’t bring about bad behavior - students thinking they can get their loans forgiven so they become MORE likely to take higher loans.</p>
<p>Public service work - I wonder if this means that you have to be in public service for the entire 10 years? Start in public service? End the 10 years in public service? How is public service defined?</p>
<p>The devil’s always in the details.</p>
<p>I think this is a good step to a more efficient system, but it could be better. I mentioned to a friend in Australia about needing to get a deferment for my loan when I was laid off and she was absolutely blown away. Apparently in Australia your student loan payments come directly out of your paycheck and are based on your income, basically like a tax. If you aren’t working you aren’t paying, no need for paperwork or phone calls. It sounds a lot more efficient to me than our current system.</p>
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<p>You don’t get them forgiven unless you live at a poverty level for 25 years…or work in public service which is like living at a poverty level. </p>
<p>But for students in “underpaid” jobs as many seem to have this year, this is a wonderful relief until they find more lucrative employment.</p>
<p>Re: “who is going to pay”…the federal government has had some loan forgiveness for decades. I worked in low income/priority school district for ten years and my loans were forgiven also.</p>
<p>The NYtimes article (<a href=“http://www.nytimes.com/2009/06/30/education/30college.html?hpw[/url]”>http://www.nytimes.com/2009/06/30/education/30college.html?hpw</a>) about this program provides more details and discusses accrued interest etc. It sounds like a good program to me. It will give relief to those that really need it and if you enter public service a little boost to make up for the lower earnings in that sector. Hopefully my S and D (in college/starting college) won’t need to use this - but its nice to know there is some backstop if the going gets rough.</p>
<p>I’m pretty sure that you would have to be in public service for the entire 10 years, and public service usually means working for the government in some capacity. Sometimes working in allied health or as a physician in an underserved area counts too.</p>
<p>The details are usually very clearly outlined when these loan repayment programs come up.</p>
<p>This really isn’t radically different from anything they’re already doing – it’s just another way to repay your student loans. They already have graduated repayment (which is when your monthly payment starts out small and gets bigger over time) and extended repayment (allowing you to repay over 30 years instead of 10). This is just a natural extension cognizant of the times – repayment based on your income. You will probably accrue interest during the months that you don’t repay if you are under the poverty line (as deferred loans and loans in forbearance still accrue interest as well, even if you defer them for financial hardship). I think the idea is that if your loan payments are income-based, you should be finished paying them off before 25 years.</p>
<p>Man, I wish my Stafford loan rate was 3.4% instead of the standard 6.8%.</p>
<p>Woo-hoo! This is definitely a victory for college students (drop in interest rates on Stafford loans)</p>
<p>I’m really happy about this because it affects my loans, though I really wish it had existed when I originally got them, 25 years ago! If so, they’d already be completely forgiven!</p>
<p>Finally Grad Plus loans are included! Good news for those borrowers who are required to have graduate degrees but don’t have high starting salaries. Finaid.org has had good info on the repayment plans posted for awhile, along with advice for students who are having trouble consolidating:
[FinAid</a> | Loans | Repayment Plans | Income Contingent Repayment](<a href=“Your Guide for College Financial Aid - Finaid”>Income Contingent Repayment - Finaid)</p>
<p>It is a victory of sorts. The dilemma is the fed subs like that of Sallie Mae and Nelnet are not considered part of the program. And until Congress and the USDOE retract the provision that one can only consolidate once, its unlikely that these corporations will turn loose of these loans to be rolled into federal directs which would be eligible for such remedies as the article mentioned. </p>
<p>But Duncan is to be given credit for some progress, however something will need to be done for those who (by federal programs or school complicity) were bound to the corporate loans. </p>
<p>And as far as cost, well there has been some convincing evidence that having fewer of our professional class as being lifetime wage slaves to these corporations might actually revive a moribund consumer economy. And other costs would be much less if the corporate loan model were to be superseded such as the 2 billion a year on the SLP subsidies, various over billings and etc probably have cost the government much more than loan mediation programs or even forgiveness would cost our economy. </p>
<p>And really we are looking at an looming economic and social disaster if the feds do not compel some compromises from the edudebt companies in regards to the debts they hold. The first generation fed into their maw will be heading to retirement in the next 10 years, and due to the ‘enhancements’ placed on these loans by these companies a sizable portion of that population will not be done paying these loans by 65 or 70. What then, masses of indigent elders because what is left of their social security is being seized by these corporate raiders? Or an increase in desperate acts by the elderly?</p>
<p>Its astonishing and appalling that we ever had such a system, or let it become a 500+ billion monster of debt…</p>
<p>Okay, I am a bit confused. I am still in college, so do I wait until I am out of college to apply? Or do I apply now then when I am out of college they decide what my payments would be?</p>
<p>Your decision there could be influenced by political factors as much as your individual student status. The current USDOE has fired quite a shot at the existing structure of student lending, albeit not directly aimed at the corporate lenders. </p>
<p>As such there is going to be a massive lobby campaign to take the guts out of Duncan’s proposal before there is a substantial amount of public pressure to somehow extend it to the FFEL sub loans. Could be complex because the lobby cabal has been subtly undermined when Buck McKeon elected to step back from the education committee. But at the same time Moody’s recent downgrading of the status of SMC bonds is going to haunt the halls of the USDOE and Congress. </p>
<p>Could be a problem, because if you sign up now loans after that point may not be eligible. But if you don’t sign up and the corporate lobbyists later take the guts out of Duncan’s initiative, that ship has sailed. </p>
<p>Lots more going on here than is being covered adequately in the general press…but since your a student make sure to read “Chronicle” and “Inside Higher Ed” as these are the niche sources for educational policy.</p>
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<p>Indeed we do. A degree here is also capped at 8k in terms of fees by the Govt too, unlike the ridiculous numbers I read on CC.</p>