A Lighter Load: new loan repayment options, starting July 1st

The San Francisco Chronicle broke a story yesterday about a new federal program that could drastically reduce student loan payments, starting July 1st.

Income-based repayment, IBR, as it is called, operates on this basic philosophy: repayment should be relative to the borrower's income and family size. This news should come as a relief to students graduating in coming months—and maybe years—as the former matriculates will be entering a job market scarred by the flailing economy

Here is a video advertising the program:



From the Chronicle's story:

"There is no income limit. Even people making $100,000 could qualify if they owe more than they earn in a year.
The payment cap works like this: If you earn less than 150 percent of the poverty level for your family size, your payment will be zero. If you earn more, your monthly loan payment will be capped at 15 percent of your annual income that exceeds 150 percent of the poverty level, divided by 12."

Another big plus is loan forgiveness. If you get IBR, after 25 years of payment, your loans will be forgiven. Poof. Gone. If you work in a non-profit or public service job, they'll disappear even more quickly: after 10 years.

Though the program is aimed at those in public or non-profit jobs, any person owing on Federal Stafford Loans is a potential candidate for IBR.

A borrower myself, I am pretty interested in seeing how this works out, and will update as I learn more.

To read the full San Francisco Chronicle story, click here.