Forgive Me, For I Have Borrowed

Posted on November 21, 2011 by

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Many state schools have raised the cost of tuition to supplement loss in revenue from other areas.  IU campuses have certainly followed suit.  As college students, many of us are facing not only the obvious dilemma of how we are going to afford the current spike in our tuition bills but also whether or not we are going to even be able to find jobs after graduation to pay off student loan debt.  While looking for jobs for after graduation, consider a position in public service.  Justin Pope from CBS News discusses the Obama administration’s plan to provide a bit of relief for student loan borrowers:

“Obama will use executive authority for two loan-relief measures. First, he will move up the start date — from 2014 to 2012 — of a plan Congress already passed that reduces the maximum repayment on federal student loans from 15 percent of discretionary incomes to 10 percent. The White House says about 1.6 million borrowers could be affected, and that remaining debt would be forgiven after 20 years, instead of 25.

The administration also will allow 5.8 million borrowers with outstanding loans from two federal programs — direct lending the Family Education Loan Program — to consolidate into a direct loan, potentially saving some borrowers hundreds of dollars per month.

Those changes may not help new borrowers much, but they could put cash in the pockets of millions still paying back their loans. They also could encourage more borrowers to take advantage of the income repayment options that are already in place, but not widely known. Finally, by consolidating into direct lending, more could qualify for that program’s public service loan forgiveness, which can forgive debts after just 10 years of repayments for people working in nonprofit or public service jobs.”

Ok, so let me back up and bring you up to speed.  Yes, the Federal Government has a student loan forgiveness program for those that are interested in public service jobs after graduation.  This includes teaching, nursing, military and law enforcement jobs as well as jobs with non-profit organizations.  However, you must meet certain requirements in order to qualify for loan forgiveness, at least for this new program.

  • Direct Loans are the only loans eligible under this new program
  • You first loan disbursement must have been made no earlier than 2008
  • You must receive a disbursement at some point in 2012
  • Your current student loans cannot be in default

This could potentially be a good way to go.  However, if you decide to enroll in this program (enrollment is from Jan-Jun 30th 2012) make sure you keep immaculate records on where you’re employed (keep all pay stubs, W-2’s, etc.) and on the 120 payments you will be making (make copies of checks, print out bank statements).  Make sure you have your bases covered.

For more details and FAQ’s on Student Loan Forgiveness click here

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Posted in: After IUSB