REPOST: To learn if you qualify for Income Based Repayment or Public Service Loan Forgiveness programs, visit the following Web sites: ibrinfo.org and StudentAid.ed.gov run by the U.S. Department of Education.

Your Money- Sandra Block:

…Starting July 1, borrowers will have a new option: a repayment program that caps monthly payments based on income. It targets borrowers who would have a hard time paying basic living expenses if they had to make standard monthly payments on their loans, says Lauren Asher, acting president for the Project on Student Debt.

Under the income-based repayment program, such borrowers will never have to spend more than 15% of their discretionary income — an amount based on federal poverty guidelines — on student loan payments.

Most who qualify for the program won’t spend more than 10% of their income on student loans. Those whose income falls below 150% of the poverty level (see box) won’t be required to make any payments, Asher says…

someone needs to do a literalist version of this video, I still have no idea what the connection is to the song….

The federal 150% of poverty limits, based on family size1
Individuals in family or household		2009 income
1		$16,245
2		$21,855
3		$27,465
4		$33,075
1 – 48 contiguous states and Washington, D.C.; thresholds are higher for Hawaii and Alaska.

How It Works:

…Here’s an example of how it would work: Suppose you have $30,000 in student loans, and you estimate that your 2009 income will be $25,000. Assuming your loans have a fixed interest rate of 6.8%, your monthly payment under the income-based repayment program would be $110, vs. $345 under a standard 10-year repayment plan.

If your income rises in the future, your payments will, too.

For some borrowers, the reduced payments won’t cover the interest on their loans. For those with subsidized Stafford loans — which are provided to students who demonstrate economic hardship — the government will pay the interest for the first three years of the program. For unsubsidized loans, the interest will be added to the balance, so you could come out of the program with a larger loan balance.

However, any amount you owe after 25 years of qualifying payments will be forgiven. This is significant, because in the past, it was nearly impossible for borrowers to get out from under their student loan debts. Under current bankruptcy laws, borrowers must demonstrate “undue hardship” before a bankruptcy court will discharge a student loan, a costly and difficult standard to meet.

“Most folks will see their incomes rise, and most will pay (the student loan) off, but for those who can’t, there is a light at the end of the tunnel,” Asher says.

Eligibility

…Not all qualify Unfortunately, not all borrowers are eligible to participate in the income-based repayment plan, even if they’re experiencing economic hardship. You’re ineligible if:

•You have private student loans. The income-based repayment program is limited to federal Stafford, Grad Plus and federal consolidated loans.

That’s important to remember if you’re starting college this fall and plan to borrow. In 2007-08, 14% of undergraduate students took out private student loans, up from 5% in 2003-04, according to a recent analysis by the Project on Student Debt…

•You’ve defaulted on your student loans. The income-based repayment program is available for all federal student loans, no matter when you took them out, but you must be in good standing to qualify, Asher says. Most student loans are considered in default after you’ve failed to make payments for nine months.

To enroll in the income-based repayment program, you’ll need to contact your lender. The Project on Student Debt has set up a website with information and updates about the program. Find it at www.ibrinfo.org.…