If you need student loan debt relief, you’re not alone. In 2014, there was approximately 1.3 TRILLION in outstanding student loan debt in America. The average borrower owed $37,172 in outstanding student loans! No wonder so many people are turning to Google and other search providers to find information about how to refinance student loans, student loan consolidation options and even student loan forgiveness!
Although we aren’t able to magically wipe out your student loan debt, the researchers here at Low Income Relief are experts and finding assistance programs and other options for low income Americans. We’ve put our best minds to work finding ALL the options that exist for low income Americans who need a little student loan debt relief… and this is what we found for you.
Low Income? You could qualify for $0/month payments with total student forgiveness in 20 years!
Under the US Department of Education’s Federal Student Aid programs, you could qualify for income based repayment plans. These repayment plans are based on your taxable income using your IRS data information, so low income individuals (and those who rely on nontaxable income like VA benefits) could qualify for payments as low as NOTHING every month.
If you make on time payments for a certain number of years, your loans will eventually be forgiven. How cool is that?!?!
(Still don’t believe me? It’s right there on the Federal Student Aid website, where it says: “For any income-driven repayment plan… periods when your required payment is zero will count toward your total repayment period.” It’s true, folks!)
There are several repayment plans you can choose from. There is no “best” option, since each one is intended to meet the needs of borrowers in different circumstances.
Pay As You Earn Repayment Plan (PAYE) caps your monthly payments at 10 percent of your discretionary income and will never exceed the Standard Repayment Plan payment amount. Discretionary income is defined as the difference between your annual income and 150 percent of the Federal Poverty Guidelines for your family size and state of residence. Your payments could be as low as ZERO dollars per month!
Every year, your payment will be recalculated according to your current income and family size. If you are married, your spouse’s income and student loan debt will be considered if you file a joint tax return.
If you still owe student loan debt after 20 years of on time payments, your outstanding student loan balance will be forgiven.
Revised Pay as You Earn Repayment Plan (REPAYE) caps your monthly income at 10 percent of your discretionary income but your payments may eventually exceed the Standard Repayment Plan payment amount.
Although the discretionary income and payment recalculations are the same as the PAYE option, REPAYE has different forgiveness terms. Under REPAYE, your loans will be forgiven after 20 years if ALL loans were for undergraduate study or after 25 years if any loans were received for graduate or professional studies.
In my opinion, PAYE is better than REPAYE.
Income Based Repayment (IBR) caps your student loans at a percentage of your discretionary income based on when you received your first student loan.
If you took out your first student loan on or after July 1, 2014, you will pay 10% of your discretionary income toward your student loans and will receive forgiveness after 20 years. If you took out your first student loan before July 1, 2014, you will pay 15 percent of your discretionary income toward your student loans and receive forgiveness after 25 years. Either way, you’ll never pay more than the Standard Repayment Plan payment amount.
Income Contingent Repayment Plan (ICR) is a little different. This plan even uses a different definition of discretionary income! With ICR, discretionary income is the difference between your annual income and 100 percent of the Federal Poverty Guideline.
Payments under this plan are the lesser of either 20 percent of your discretionary income or the amount you would pay on a fixed repayment plan over 12 years, adjusted to your income. Payments are recalculated every year based on your income, family size and the total amount of your Direct Loans. The outstanding balance is forgiven after 25 years.
How do I apply?
Signing up for these repayment options is simple. Log in to StudentLoans.gov and submit an Income Driven Repayment Plan Request. You can select the plan you want or request that your loan servicer choose the best loan option for your circumstances (with the lowest monthly payment amount). You can see more detailed application instructions here.
Qualify for the PSLF Program? You could get student loan forgiveness in just 10 years!
If you are employed by a government or non-profit organization, you may qualify for student loan forgiveness under the Public Service Loan Forgiveness Program. This program forgives the remaining balance of your Direct Loans after 120 qualifying monthly payments, including payments on PAYE, REPAYE, IBR and ICR payment arrangements!
To qualify for PSLF, you must work 30 hours or more per week for an employer that meets one of the following criteria:
- Governmental organization (federal, state, local or tribal)
- Non-profit organization that are tax exempt under Section 501(c)(3) of the IRS
- Full-time AmeriCoprs or Peace Corps volunteer service
Not low income? Everyone can use these payment options!
I get it – student loans can squeeze the middle class, too. Although these student loan assistance programs aren’t quite as sweet, there are still some options available for higher income earners.
Standard Repayment Plan is your default option. Your payments are a fixed amount (at least $50 per month) and must be repaid within a set amuont of time. If you owe less than $7,500, you are expected to repay within 10 years. Higher balances result in longer repayment terms, with a maximum of 30 years for $60,000 or more in student loan debt.
Graduated Repayment Plan are great for borrowers who will eventually be earning more over time. Payments start low and then increase gradually, usually every two years. The payment will never be lower than the amount of interest that accrues between payments. Payments are made for up to 10 years (or up to 30 years for consolidated loans).
Extended Repayment Plan features fixed or graduated payments divided over 25 years, so that all the payments are lower. To qualify, you must owe more than $30,000 of either Direct Loans or FFEL loans and meet other requirements. Payments will be fixed or graduated, but payments are generally lower than those under the Standard or Graduated Repayment Plans.