Wednesday, June 24, 2009

College Cost Reduction and Access Act Helps with Federal Loans

New program to kick in

Did your college diploma come with a hefty student loan bill?

Did your college diploma come with a hefty student loan bill?

The College Cost Reduction and Access Act went into effect in 2007, but some of the provisions are still kicking in. Specifically, The Income-Based Repayment Plan kicks in on July 1.

The part of the College Cost Reduction and Access Act, which is already in effect, is the The Public Service Loan Forgiveness Plan.

Income-Based Repayment Plan

First off, the College Cost Reductions and Access Act only applies to federal loans. If you got student loans from a private loan company, these programs can’t help you, unfortunately.

But every little bit helps, right? The Income-Based Repayment Plan caps payments on federal student loans based on the family size and income. Most eligible borrowers will get their payments capped at only 10 percent of their income. For low-income families, the payments could be even lower.

In the long run

The Income-Based Repayment plan also forgives any remaining debt after the borrower has made payments for 25 years. This is similar to a provision in The Public Service Loan Forgiveness Plan, which forgives any remaining debt after 10 years, starting in October 2007.

The Public Service Loan Forgiveness Plan is designed to help and encourage public service workers. Degrees to work in the public service sector can often be very expensive, and salaries are average or lower than average.

More on Public Service Loan Forgiveness

In order to qualify for The Public Service Loan Forgiveness Plan, borrowers must work in public service full time for 10 years. As long as public service workers are making regular payments and working full time, any debt to the feds will be forgiven after 10 years. ... click here to read the rest of the article titled "College Cost Reduction and Access Act Helps with Federal Loans"

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