There are various government programs that are being used to help resolve the problem of exploding student loan debt. The first is a federal loan consolidation program and the second is an income-based repayment plan. In this article, well explore who can and cannot seek relief under these federal student loan programs.
Under current law, students who qualify for loan forgiveness are permitted to pay 15% of their discretionary income towards their student loans over a period of 25 years. If any student loan debt remains after 25 years, it will be forgiven. The newly announced terms (a reduction from 15% to 10% and decreasing the length from 25 years to 20 years) won't apply to federal student loans unless the loan was issued after 2012.
However, the loan forgiveness sounds extremely generous and you are probably wondering if you qualify. Let's take a look into who qualifies and who doesn't for this student loan debt relief. First, the program only applies to federal student loans. Second, you will not be eligible if your student loan is in default.
Who Qualifies For Debt Forgiveness
? Applies to all types of educational loans (undergraduate, graduate, professional, and job training).
Who Does Not Qualify For Debt Forgiveness
? Private Student Loans
? Loans in Default
If you're asking the federal government for help repaying your student loans through their loan forgiveness program, be prepared to keep up with the loan servicer's documentation requirements. You'll be asked to submit your tax returns and paystubs to verify that what you claimed on your application is accurate. The documentation requirements just don't stop after your initial application, you'll be required to apply for forgiveness each year and your payment may change based on your income. If you miss a document that's been requested, your regular monthly payment instead of your loan forgiveness payment will be due.
With any debt obligation, the goal is to pay it off as quickly as possible to avoid interest charges. The reason most people get into credit card trouble isn't because of the purchases they put on the card, but the costs of carrying a credit card balance for so many years while making just the minimum payment on it. At 20% interest per year, that's going to cost you. Most federal student loans accrue interest at 6.8%. That sounds reasonable, but when such a high amount is borrowed, those student loan interest payments continue to accrue and can really end up hurting you. Please view this site http://classroom.synonym.com/student-loan-forgiveness-4695399.html for further details.