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I'm posting this here since it relates mostly to student loans. Move the thread if it should go elsewhere.
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http://www.ibrinfo.org
The skinny....
The Federal Student Loan Program is starting up a new repayment plan...the Income Based Repayment Plan.
In short, it's almost identical to the Income-Contingent Repayment Plan (so I'm not sure why they felt a need to make a 5th plan), but your monthly payments are capped at a percentage of your income adjusted for family size. Granted, if you are married, your spouse's income is factored in, FYI.
The good news? They are pushing for a "public service" component which imposes a 10-year forgiveness program.
If you are employed...
* by any nonprofit, tax-exempt 501(c )(3) organization;
* by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or
* or serve in a full-time AmeriCorps or Peace Corps position; then
"Full-Time" means 30 hours or more a week, so if you aren't working a full 40, you can still qualify.
10 Years does not have to be 10 consecutive years, just 10 years of total service (120 qualifying payments), and payments made as early as October 2007 while in a qualifying job apply to this 120 payment rule.
BEST OF ALL, if you qualify for the loan forgiveness under the PSLF (Public Service Loan Forgiveness), there is NO TAX PENALTY for the balance forgiven after 10 years of service.
NOTE: You can submit your e-mail if you want to be kept up-to-date on developments with these programs.
NOW, the downside.
1. At this time, the standard of no tax on the balance forgiven for the PSLF program DOES NOT apply to the balance forgiven after 25 years of repayment. The people pushing this program see that as insane and work is ongoing to extend the "common sense" standard of no tax on forgiven loan balances to everyone in the IBR and ICR programs just as it now applies for those in the the PSLF program.
2. The scope of the PSLF program is well-intended, but may not help many. Military service isn't a right, public service jobs (non-profits) don't always remain solvent and getting in 10 years could be difficult, and while government jobs (federal, state, local) do tend to remain stable, they can be very hard to get. This is why the tax penalty on loan forgiveness needs to be abolished. As most with government jobs make enough money to repay student loans, it seems unjust to grant these people an easy out after 10 years of payments while others who struggle for 25 years are saddled with a tax burden at the end of the road.
As some people here work in government or non-profits, I thought I'd put this up as an FYI.
26 Apr 2009, 8:09 am
