The thought of going back to school after having been out of school for so long can seem distasteful, especially after you’ve already paid off your college loans just to realize you may have to take out another student loan. It’s hard to stomach the thousands you may end up owing again.
Luckily, there is a new law that has been passed that can make your loan repayment easier than ever before.
What Is This New Law?
The new law is called the College Cost Reduction and Access Act. It just took effect on July 1, 2009, this law was set in place to help make college more affordable by making repayment options simpler.
How Does It Work?
There are a couple of components associated with this law:
- Income-Based Repayment (IBR) – This component places a cap on the monthly student loan payments to be made based on the borrower’s income and family size. So if you are an eligible borrower, your IBR loan payment will be less than 10 percent of your income. The lower your earnings, the lower your loan payment. Also, after 25 years of making qualifying payments, if you have any remaining debt, it will be forgiven. The downside to this component is that you have to make sure you take out the right type of loan to qualify. And what’s more is if you get married, your spouse’s income will count when calculating your monthly payment.
- Public Service Loan Forgiveness (PSLF) – The second component of this law is the PSLF, which retires the direct or guaranteed (FFEL) student loan debt of public service professionals who have been making 10 years of qualified payments on their loans. Public service employment includes: nonprofit employment, government, public school or college employment, and national service participation (i.e. Peace Corps).
If you don’t think you might qualify for this new loan repayment law, you might consider checking with your employer for tuition reimbursement options. This way, you can make it a little easier to afford new school loans.