Department of Education Ties Student Loan Payments To Income

Department of Education Ties Student Loan Payments To Income July 2nd, 2009 by Aaron Blakely

In response to the tough economic times and an even tougher job market (unemployment is almost at 10%), the Department of Education has passed a plan that will help college students, past, present, and future with their federal loan repayment program.

This program essentially allows you to reduce your loan payments based on your income. This program caps the monthly payment you are required to pay based on income and family size.

The loans that qualify for this program are, any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training)

For more information on the qualifications for this program, checkout this Department of Education website, Student Aid on the Web.

Also, the interest rate on federal Stafford loans, the most widely used federal student loan, will be reduced from 6% to 5.6%. Furthermore, by 2012, that rate will be decreased to 3.4% by mandate from Congress. That means great things for students who will be using federal student loans to fund their education over the next few years.

Tags: Department of Education, Federal Loans, Interest Rates, loans, Stafford Loans

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