Good morning, my Frugalistas! Here is the second post I promised you about student loans. We have Heather Jarvis, a former capital defense attorney, who has made it her life’s mission to educate professionals about student loans and their financial impact. Heather has contributed to student debt relief policy for the House Education Committee and others in Congress, and spent more than six years advocating for public service loan forgiveness, which allows more recent graduates to dedicate their careers to the greater good.
How will the new debt ceiling deal impact people with student loans?
Key student aid programs are largely intact, and I am relieved to report that the new law avoids some of the proposed cuts that would have hurt students the most. There are three main provisions in the debt ceiling deal related to higher education:
*Funding is provided for the Pell Grant program.
*The in-school loan interest subsidy for graduate and professional students is eliminated beginning July 1, 2012.
* “Repayment incentives,” or cost reductions earned by certain borrowers, are eliminated for loans disbursed on or after July 1, 2012.
If a person has a large amount of student loans, can he or she file for bankruptcy?
It isn’t easy to discharge student loans in bankruptcy. You have to show an “undue hardship”and courts have made that very difficult to do. Borrowers should contact an attorney familiar with bankruptcy and student loans, because bankruptcy can affect you for years. I recommend folks look for more information on www.studentloanborrowerassistance.org
I borrowed a large amount of student loans and make a low wage. What are some payment programs available to me?
Income-Based Repayment (IBR) could be just the thing. IBR enables borrowers to make affordable monthly payments on federal student loans based on a percentage of income. There are also other advantages like an interest subsidy and a forgiveness provision. Learn more about Income-Based Repayment through askheatherjarvis.com and IBRinfo.org.
What’s the difference between a private loan and government backed loan?
Private student loans can be risky and are usually more expensive. Most private loans are at variable interest rates with no cap. Private student loans lack the borrower protections and flexible repayment provisions of federal student loans. Borrowers should look to federal loans first.
Do you have student loans? If so, is it easy for you to pay them off? What are some things that you have done to help pay your student loan bill down? Do you think student loans are a rip off?