Life after college can be hard enough without overwhelming federal loan debt, especially in such a tough economy. Fortunately, beginning Wednesday, July 1, college graduates may pay back their federal student loans in a simpler and more affordable way. The Income-Based Repayment program (IBR), which was a major component of the 2007 College Cost Reduction Act, will allow grads with federal loans to lower their payments if they are in enough debt relative to their income. For most borrows, this means that loan payments will be less than 10% of their income and any remaining debt will be forgiven after 25 years of qualifying payments.
Sounds good, right? This is where it gets a little tricky, so bear with us...
The federal loan payment must be more than 15% of whatever you earn above 150% of poverty level to pay off the loans on a standard 10-year payment plan. So, for example, if you earn below 150% of the poverty level, your required payment will be zero; if you earn more, your payment will be capped at 15% of whatever you earn above that amount.
Click here to learn more about this great opportunity!