Student Loan Repayments Based On Income

3 07 2009

student-loan1 Hurray! Starting on Wednesday, July 8, 2009 the Education Department will offer a loan      repayment plan that is based on income. I guess I can open my Direct Loan mail now.

Shouts to the Chicago Public School’s former CEO Arne Duncan for stepping up to the plate: “We know today’s borrowers are concerned about their ability to repay student loans in the current economic environment,” Arne Duncan, the education secretary, said in a statement. “This new plan addresses the issue head-on by giving them the option of a reduced monthly payment tied to their annual income.

According to the article,  New Plan Ties Reduced College Loan Payments to Income by Jonathan D. Glater, “Also on Wednesday, the interest rate on new federal Stafford loans, the most widely used federally guaranteed student loan, will drop to 5.6 percent, from 6 percent. By 2012, the rate will fall to 3.4 percent, under a schedule mandated by Congress. ”

While the reduced rates only apply to new loans, those who consolidated their loans in the past are eligible for the new repayment plan.

If you would like to calculate your payment plan, visit the Education Department’s website, Student Aid on the Web.

Read more at the NY Times.

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