Feds might forgive student loan debt
If the federal government forgave your student loans, would you do a happy dance?
If you’ve got student loan payments weighing you down, the federal government just might forgive your student loan debt. There are two new programs in place that make it possible for the federal government to partially forgive student loan debt.
It’s a government program, so under both of these programs only federal student loans are forgiven. Private loans, military loans and other personal loans aren’t included in the program. “PLUS loans for parents, and consolidated loans that include PLUS loans are not eligible for these programs,” reports The Weekly Challenger.
Time out
The first program that could get the feds to forgive student loan debt is called the Income-Based Repayment Plan. According to a story published today on TheWeeklyChallenger.com (http://www.theweeklychallenger.com/News/article/article.asp?NewsID=97086&sID=4):
It caps monthly payments at an affordable level based on your income and family size, and forgives any debt and interest that remains after 25 years.
That means if you’re underpaid, underemployed, or just plain unemployed, your student loan payments won’t break the bank. If you owe more on your federal student loans than you earn in a year, you probably qualify. The lower your income, the lower your monthly payment will be: in some cases, as low as $0. Income-Based Repayment covers almost all federal loans – past, present, or future – made by any lender, whether for college or graduate school.
This new program will go into effect on July 1.
Trade-in
The other new program is called Public Service Loan Forgiveness. As you can probably infer from the title, under this program, the federal government will forgive student loan debt in exchange for services. The Weekly Challenger reports:
If you work in a government, nonprofit, or other public service job, you could have your remaining student loan debt forgiven after just ten years of Income-Based Repayment, or certain other payments. Your loans have to be in the federal Direct Loan Program to qualify, but the ten years don’t have to be consecutive. You just need to make a total of 120 payments while working full-time for a public or nonprofit employer, starting on or after October 1, 2007.
Public Service Loan Forgiveness can make it possible for people with significant amounts of student debt to take low-paying but important jobs in teaching, social work, rural medicine, legal aid, and other fields that often require years of expensive schooling.
Helping the economy
Jon Chattman of the Huffington Post said in a column way back in February that “forgiving student loan debt would stimulate economy.” In fact, that was the title of his commentary.
Actually, in his piece he said that this guy Robert Applebaum, an attorney from New York, started a campaign on Facebook called “Cancel Student Loan Debt to Stimulate Economy.” Applebaum said:
“I struggle to pay my rent and bills and have never defaulted on my student loans,” he said Feb. 4. “But I also don’t spend money on consumer goods anymore — not only because I can’t afford them, but because I’m afraid the situation will only get worse…”
“One-time tax rebates and meager tax cuts do nothing to stimulate the economy. A recession is as much a psychological phenomenon as anything else. Knowing I’d have an extra $500 per month in my pocket will get me spending again. Multiply that across the country and the economy will start to move again.”
These new government programs to forgive student loan debt aren’t quite what Applebaum had in mind, but it’s definitely a step in the right direction.
I am writing n rspones on the behalf of trying to have my student loan forgiven, due to the fact that my income has decrease and to clear this debt will help me in others way of tken care of other bills. Who do I nee to contact or where do I start. I do work in the public school. Can I do work though the school system to gelp with forgiven my loan debt.
I AM BEING HELD FOR A LOAN THAT I AT THE TIME AGREED TO PAY BUT I DIDN’T RECEIVE THE EDUCATION THAT I ENROLLED IN THE SCHOOL MOVED OR CLOSED DOWN BEFOR I COULD USE ANY OF MY LOAN WHY AM I REASPONIABLE FOR THE LOAN PLEASE E-MAIL ME WITH SOME HELP.
what if i am still in school? will they cover them then?
Can I get my student loansforgiven if I am an inner city youth minister working with low income families. WE help with a food bank, GED classes, parenting classes, domestic violence classes, and etc.
With the twister of economic despair upsetting many people these days, becoming debt free is now the major center on many people’s mentality People are opening to appreciate if they want exist debt free they have to prepare, preparation, plus take achievement to get there. It is better expend some time to accomplish this commission and get consequences over debt free life.
It sounds great, but there’s a huge old hitch in these programs. I’m not saying they aren’t great ideas, and let me testify about this right here and now – the costs of higher education in the US are usurious. It’s insane, and a lot of universities are having to raise their rates even further to compensate for budget cuts because of the recession and budget shortfalls – in most industrialized nations, tertiary (college) education is far cheaper, if not FREE, and if we are supposed be on this “greatest nation in the world” kick, then quite frankly, the evidence is kind of against us in that department, but back to the point. The thing about student loans is that most student loans are UN-subsidized, and therefore, are made by banks NOT the government. Bearing that in mind, it means that most students aren’t going to have much a dent made in their student loans by these programs. A person is lucky to have more than 30% of their student aid package be from subsidized Stafford loans. That said, the costs of higher education are prohibitive. Food for thought – if our government knocked off the periodic wars that do NO ONE any good (Iraq, Vietnam, Korea, etc) and we were to reduce defense spending accordingly – a 50% reduction would still be far and away more defense spending any other OECD country – we could send 75% of kids of college age to school long enough for them to get at least one, if not two, bachelor’s degrees, some a bachelor’s and master’s. If we’re supposed to be so concerned as a nation about education, then we aren’t that serious about it in action.