Student Loan Debt Relief

Debt relief programMuch of the sensationalism around media coverage of student loan debt derives from the staggering amount of debt. As Forbes reports, student loan debt has reached $1.2 trillion, with $1 trillion from federal sources. To put this amount in national context, consider that total federal debt is approximately $16.7 trillion, which means that student loan debt accounts for 6 percent of it. Student loans are now the second highest ranking consumer debt, with mortgages in first place.

Student Loan Debt Relief Programs

The following student loan debt relief programs can help qualifying borrowers better manage repayment:

Public Service Loan Forgiveness

This relief program was the result of a congressional effort in 2007 to address the burden of student loan debt for graduates interested in public service work. Program requirements are as follows:

Income-Driven Repayment Plans

These plans are part of federal efforts to provide student loan debt relief based on a strategy of tying the monthly amount due to the income the borrower earns. Common features of all three plans are:

Specific details of each of the plans are as follows:

Income-Based Repayment Plan

Pay As You Earn Plan

Income-Contingent Plan

Income-Sensitive Repayment Plan

Borrowers with FFEL loans, which were phased out from new lending in 2010, may be eligible for this plan.

Service Members Civil Service Relief Act

As the Huffington Post reports, the GI Bill does not cover student loan debt, which service members may already have; however, service members may be eligible for the Public Service Loan Forgiveness Program. In addition, the Service Members Civil Service Relief Act caps the interest rate on existing federal and private loans at 6 percent while the borrower is on active service.

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