Having trouble with your student loans? If so, there’s good news for you. From 1 July, you can choose a new, softer, more manageable payment plan to help you out of debt.
What is the income-based repayment program?
This program is designed as an income-based repayment plan. It will result in small monthly installments to the existing program for troubled borrowers to repay specified income. It will be your monthly payments based onAdjusted gross income of your family and your family size. Any unpaid principal and interest will be added to your total loan amount, but all outstanding debts will be wiped out after 25 years. If you work in the nonprofit or public sector, how long will it take before your debts are written off will be further reduced to 10 years. Who qualifies for this program?
You may qualify for this program as long as you unemployed, receive a relatively low salary orrather large debt. What exactly qualifies as a great sin? Large debts because the loans, which is classified more than your annual income. The great thing about this scheme is that there is no income limit – you could qualify for the program, even though you earn $ 100,000, as long as you owe more than what you earn per year.
How does it work?
Apart from not an income limit, the program also has a payment cap or limit on your monthly payments, to ensure that you do nothave to pay more than you can really afford.
Here is to work as the payment cap. Find out, note the corresponding poverty threshold for the size of your family in your state (note that the poverty line is a little higher in Hawaii and Alaska). If your current level of less than 150% of this, then you have no repayment plan under the income-based. If your salary is higher than that, your monthly payment or a ceiling of 15% of the difference between the annual income and limited150% of the poverty line, divided by 12
For example, if you’re single and earn less than $ 16,245 per year (150% of the poverty level in most states), then you have nothing to pay no matter how big your debt. If you earn $ 30,000 a year, you should not pay more than $ 172 a month.
If your monthly payment by this formula is less than what you pay today under the standard repayment plan for 10 years, then you can for the income-basedRepayment schedule. However, loans that are already in default does not qualify for this program.
This revolutionary payment plan is currently on both subsidized and unsubsidized Stafford student loans and Grad PLUS loans. As you can see, this Department of Education issued loans are fully guaranteed by the Government under its loan program, and also from lenders such as Sallie Mae. Parent PLUS loans and private loans arenot in this program.
To see if your credit for income-based repayment plan qualified to verify directly with your lender. GP