Chanel
What are some programs that help students pay off college debt ?
I am asking because a lot of these student loan forgiveness programs are scams. It is very hard to pay off my students loans and make a living for my self and my son. I went to college to earn more money and have a better living. Now it just seems like a big scam because not only am I struggling to pay my bills I can't afford to make payments on my student loans. This kind of defeated my whole purpose for going to college. #financial-aid #student-loans #federal-government
2 answers
Sheila Jordan
Sheila’s Answer
Paying off student loan debt can be a daunting experience. I have two (2) young adults; one in the medical field and one in education. There are programs out there which they meet the requirements for certain programs. Start by contacting your loan service provider to see what options they may have. Here's some information for your consideration.
PUBLIC SERVICE LOAN FORGIVENESS
• The Public Service Loan Forgiveness program helps people working in public service jobs, and a variety of fields qualify for PSLF. For this program, it’s less about your job title and more about the organization you work for. There are plenty of jobs that qualify for PSLF that you might not think of.
• After 120 payments, you can qualify for 100% loan forgiveness. The payments don’t need to be consecutive, but they do need to be made on a qualifying repayment plan.
FORGIVENESS WITH INCOME-BASED REPAYMENT (IBR)
• Through IBR, your student loan payments are capped at 10% or 15% of your discretionary income. After making consistent payments under IBR for 20 or 25 years (terms depend on when you borrowed), any remaining loan balance will be forgiven.
• Under current tax law, loans that are forgiven under this program can be taxed as income. Keep this in mind when pursuing this payment plan - that way, you’re not surprised by a potentially large tax bill.
FORGIVENESS WITH PAY AS YOU EARN (PAYE)
• Pay As You Earn (PAYE) is similar to Income-Based Repayment, in that it isn’t a typical forgiveness program. However, you could be eligible for forgiveness after a certain period of time.
• The PAYE plan caps your monthly payment at 10% of your discretionary income. After borrowers make payments for 20 years, any remaining balance becomes eligible for forgiveness.
• As with IBR, your forgiven balance might be treated as taxable income.
Sheila recommends the following next steps:
Paul Gullatte
Paul’s Answer
Sorry to read that you are having a hard time paying off your student loans. Take comfort that your situation is very common and there is nothing you did wrong. While I am not familiar with the loan forgiveness programs that may be available I do know that you have to contact the company servicing your loan to determine what your options are. They may be able to work with you to find a payment that is more suitable than what your paying now. It never hurts to ask. Also, if you have multiple loans, combining them all into one may help since you'll only be paying one interest rate versus multiple.
I've attached a link to an article that appeared in Consumer Reports and the student debt crisis: http://www.consumerreports.org/student-loan-debt-crisis/?loginMethod=auto