Here are six things you need to know about recent changes.
1. The grace period on Stafford loans has changed.
If you take out a Stafford loan for undergraduate work in 2012-2013, you won't have to make payments until six months after graduating. This has always been the policy. The difference is that in the past, this six-month grace period was interest-free. Starting July 1, 2014, interest will accrue during that grace period.
2. How much you make matters.
The government's Income-Based Repayment (IBR) program allows you to pay back federal loans on a sliding scale based on your income and family size. Anyone who owes more in federal student loans than they earn is eligible to choose IBR. For most borrowers, payments are less than 10 percent of income. The lower your salary, the lower your payment. (Prior to July 2012, the IBR rate was 15 percent.) If you still owe on your loan after 20 years, and consistently have made on-time payments, your remaining balance may be canceled (the previous requirement was 25 years). To switch to an IBR payment plan, contact your loan company. You also can learn more at Federal Student Aid or call 1-800-4FEDAID (1-800-433-3243).
3. Public service workers get a break.
With the Public Service Loan Forgiveness program, people who meet certain criteria do not need to pay their loan. There are several qualifications. First, you need to be employed full-time in an eligible public service field for 10 years. You also need to have made 120 loan payments on or after Oct. 1, 2007 (payments made prior to that do not count). Eligible public service jobs include emergency management, government, military service, law enforcement, public health (including nurses and nurse practitioners), social work, public education, librarians and employees who work for tax-exempt nonprofit organizations. Learn more at MyFedLoan.org.
4. Consider consolidation.
If you have government and/or private direct loans or federal family education loans (FFEL), you may be able to consolidate them. The new consolidated loan could have a lower interest rate than your current blended rate. Learn more at Federal Student Aid or call 1-800-4FEDAID (1-800-433-3243).
5. Ask for assistance.
Graduates with educational debt who take low-paying jobs in certain fields may be eligible for Loan Repayment Assistance Programs (LRAP). LRAPs are most common in the fields of education, medicine (for work in certain high-need communities) and law (for work as public defenders or in public interest organizations). The best way to find out whether your employer offers an LRAP is to ask.
Thousands of college grads are entering a tight job market burdened with debt. If possible, talk to your school's financial aid officer about your repayment options before you don that cap and gown. Once you get into the right plan, you can focus on landing a good job and building your career.
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