May 19, 2009
While this won’t help parents as it doesn’t apply to PLUS Loans, this will help your students. Starting July 1, 2009 a new Income-Based-Repayment (IBR) plan will be offered to students for Stafford, GradPLUS and Consolidation loans that are not used to pay back Parent PLUS Loans.
According to the Team FFELP IBR Workgroup, “A borrower must have a partial financial hardship to qualify for an income-based repayment plan. A borrower who at one time had a partial financial hardship, but ceases to have a partial financial hardship may remain in the IBR plan.”
Partial Financial Hardship is calculated with the equation:
Standard Payment > 15%[AGI – (150% Poverty line applicable to family size)]
This means, partial financial hardship occurs when the standard repayment plan based on a 10-year repayment period at the time the borrower initially starts repayment is greater than 15 percent of the difference between the borrower’s adjusted gross income and 150% of the poverty line for the borrower’s family size.
Family size is defined as members of your household, such as spouse, children, grandparents who live in your residence with you and receive more than half their support from you. So a parent with Alzheimer’s that you take care of would count, but a roommate would not. It does include unborn children that will be born over the next year.
To qualify, you will need to authorize your loan company to receive the current year and past 3 years worth of tax returns from the IRS using IRS Form4506-T. Contact your lender to learn more!
April 1, 2009
Trust me – take 15 minutes now, before you graduate and read a little on this convenient loan repayment portal set up by the Department of Education.
Learn NOW what will happen in the coming months BEFORE you graduate. Remember, you’ve taken out loans and sworn on paper that you’ll repay, so it’s worth your time to learn about what’s ahead for you.
Also, check out this Stafford Loan exit counseling interview – if you have a Stafford loan, you’ll be required to go through exit counseling. You’ll learn about your rights & responsibilities as a borrower in the federal student loan program.