Spring Break
Program offers potential forgiveness for student loans
Harvey Ranola
Issue date: 5/11/09 Section: News
For many students, graduation is right around the corner, and for those taking advantage of federal loans, graduation also means having to start paying off their loans in six months.
This July, students will be able to take advantage of a new federal loan forgiveness program called Income-Based Repayment - part of the College Cost Reduction and Access Act of 2007.
The program is designed to make monthly payments more manageable based on a borrower's income and family size.
If borrowers owe more than they make, chances are they'll be eligible for the program.
Edie Irons, communication director for The Project on Student Debt, said the program is the culmination of a long process that first started in 2005 through the Department of Education, and was eventually passed by Congress in 2007.
"It is pretty exciting," Irons said. "It's really gratifying mostly to hear from borrowers who are going to get relief because of (Income-Based Repayment). There are thousands of people out there who can't wait to get into IBR and see their loan payments reduced to more manageable amounts."
Loans covered by the program include those made by the Department of Education, Stafford, plus and consolidation loans.
Eligible applicants will have their monthly payments capped at 15 percent of their discretionary income, which is determined by the difference between adjusted gross income and 150 percent of the federal poverty line.
After 25 years of repayment, the balance of the loan is forgiven.
Raychel VonBargen, a junior interior design major, said if her career as a designer doesn't pan out, the Income-Based Repayment program is something she might look into, but she also said the length of time for the loans to be forgiven is daunting.
"Twenty-five years just seems so long," she said. "I don't want to have debt looming over me for 25 years. I would do whatever I could to pay it off."
Income-Based Repayment isn't the only option for graduates who have low paying jobs after accumulating a significant amount of debt from student loans.
This July, students will be able to take advantage of a new federal loan forgiveness program called Income-Based Repayment - part of the College Cost Reduction and Access Act of 2007.
The program is designed to make monthly payments more manageable based on a borrower's income and family size.
If borrowers owe more than they make, chances are they'll be eligible for the program.
Edie Irons, communication director for The Project on Student Debt, said the program is the culmination of a long process that first started in 2005 through the Department of Education, and was eventually passed by Congress in 2007.
"It is pretty exciting," Irons said. "It's really gratifying mostly to hear from borrowers who are going to get relief because of (Income-Based Repayment). There are thousands of people out there who can't wait to get into IBR and see their loan payments reduced to more manageable amounts."
Loans covered by the program include those made by the Department of Education, Stafford, plus and consolidation loans.
Eligible applicants will have their monthly payments capped at 15 percent of their discretionary income, which is determined by the difference between adjusted gross income and 150 percent of the federal poverty line.
After 25 years of repayment, the balance of the loan is forgiven.
Raychel VonBargen, a junior interior design major, said if her career as a designer doesn't pan out, the Income-Based Repayment program is something she might look into, but she also said the length of time for the loans to be forgiven is daunting.
"Twenty-five years just seems so long," she said. "I don't want to have debt looming over me for 25 years. I would do whatever I could to pay it off."
Income-Based Repayment isn't the only option for graduates who have low paying jobs after accumulating a significant amount of debt from student loans.
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