If you or someone you know is paying off student debt, there’s a new repayment program that you’re going to want to know about.
It’s a “pay as you earn” system so your payments are based on your salary.
The program called REPAYE is available to anyone regardless of when you took out the loan or your income level.
Candace Jenkins always wanted a career where she could help others. But her bachelors and masters degrees in social work could leave her deep in the red, even though she has a full time job.
“I’m very worried, very concerned about how I’m going to pay it back,” said Jenkins.
Her student loan payments start next month. Fortunately REPAYE could be her solution.
It caps your student loan payments at 10% of your monthly income (minus 150% of the poverty line for your state and family size).
“The other neat thing about it is that you don’t have to have a statement of hardship. So based on your income it’s just sort of assumed that there’s hardship,” said Susan Ingles an Attorney with South Carolina Legal Services.
She says it doesn’t matter when you took out the loans or how much you make.
This repayment plan is not for you if you have a salary that you believe will rise quickly. Also if any of your consolidated student loans are under your parents name, you won’t qualify.
Gloria Chinn signed up for the precursor to the plan called PAYE, and her low salary means her monthly loan payments are zero.
“I was like wow I can live and my credit is going to be OK,” said Chinn.
So, how is that possible?
Here’s an example. This repayment estimator shows for someone earning $15,000 with a loan balance of 40,000 with 6% interest, the payment to start is zero and your projected loan forgiveness is nearly $60,000.
For, Jenkings who earns twice that, her payments would be more like $100 a month, but that’s far below the $700 she’ll owe without it.
“It gives me hope to know that I can pay back my loans.”
And after 20 years the outstanding loan is forgiven. Which gives more students hope that they won’t be in debt for life.