Lower Payment Programs

I must admit that until I became desperate for a solution to my own financial crisis, I had no idea how many programs are available to help those of us who struggle under the weight of student loan debt and large monthly repayment requirements. The lenders do not make this information readily available. They have no reason to do so if there is hope you will pay them or they are not mandated to do so by the government.

Income Contingent Repayment (http://www.finaid.org/loans/icr.phtml) is a program available for borrowers who find themselves in jobs with lower incomes. Monthly payments are based on income, family size, and the amount borrowed. Payment amounts are adjusted annually to reflect any changes. This form of repayment is available only through the US Dept of Education. If you have a loan through a bank or private institution that doesn't qualify, you may be able to get a federal direct consolidation loan in order to qualify for the ICR program.

Income Based Repayment (http://www.finaid.org/loans/ibr.phtml) is set to become available in July 2009. It will join the ISR and ICR programs. This program is designed to help borrowers in low income and public service positions. Monthly payments are capped based on a percentage of discretionary income (figured using the borrower's income, family size, amount borrowed). A repayment period of up to 25 years is set and remaining debt is forgiven after that point. This program is especially helpful if you have a large family or a high debt and low income situation.

The Public Service Loan Forgiveness Program (http://www.finaid.org/loans/publicservice.phtml) requires 120 payments to be made during which time you are employed full time in a public service position and allows the forgiveness of the remaining debt after those ten years. This program encourages people to seek employment in public service positions and helps create a trade off between the lower pay and loan forgiveness.

The Project on Student Debt (http://projectonstudentdebt.org/initiative_view.php?initiative_idx=6) is an initiative of the Institute for College Access & Success. They are working toward even more fair practices when it comes to student loan debt and repayment through a multi pronged approach. Increased access to need-based grants, stronger consumer protection for private student loan borrowers (including the treatment of student loans as another consumer debt in a bankruptcy proceeding), and greater potential access to income based repayment and public service loan forgiveness are all initiatives they are pursuing.

IBRinfo (http://www.ibrinfo.org/) offers email notification alerts as more federal programs become available if you simply register your email address. Their site also includes an IBR calculator and explanation of programs both underway and in the works. This site is affiliated with the Project on Student Debt.

For each of these sites, please follow the links and read carefully to be sure you fully understand the terms of each program, the caveats and potential effects on tax liability.

There is a wealth of information available through the Internet. It takes time and patience to sort through the sites, but the investment will pay off in the long run if you save money and the stress of financial worry. Some of the sites can be confusing, but most offer additional links or contact information as well as their own presentations.

If you find yourself at a roadblock in the material, unable or unsure how to proceed, keep reaching out for as long as it takes to find an answer and get the help you need. Be your own advocate. Be polite, but persistent. If you reach a person who can't help you, ask them if they know someone who can. If they won't give out contact information, ask that your message, information, or email be forwarded.

As always, in order to achieve the best we can for ourselves, we must educate ourselves. If you're functioning under the burden of student loan debt, you already know what it's like to have to work hard to get where you want to be. Treat this as one last course to pass. Study the material and hopefully you can graduate from indebtedness.