Starting July 1, repaying student loans will be easier for some borrowers. A new program will go into effect that will cap monthly student loan payments based on income.
A borrower must first meet these conditions:
* This repayment plan only applies to federal, not private, student loans.
* The loans must be in good standing. So make sure to keep up with your payments.
* You must contact your lender to enroll.
If you meet these qualifications, your student loan payments cannot exceed 15% of the difference between your income and the poverty level (right now that's $16,245 per year, or $1,353.75 per month). For example, if you make $24,000 a year ($2,000 a month), you're $646.25 over the poverty level every month. 15% of that is $96.94, which would be the maximum amount you would be required to make in student loan payments every month.
While lower payments are great in the short term, remember that they also extend the time it takes to pay off the loan, adding to the interest you'll have to pay. Make sure that when you can afford to make larger payments, you do.
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