One of the advantages of having a federal student loan as opposed to a state sponsored or private one are the income based repayment plans available. Students struggling to pay large balances of Stafford, Perkins, and/or Graduate PLUS loans, can benefit from an Income Based Repayment (IBR) plan. For more recent graduates, there is a version of IBR called Pay As You Earn (PAYE), which is the best one yet.
However, there are some requirements to consider:
- You cannot have any student loan balances as of October 1, 2007
- You must have taken out a federal student loan on or after October 1, 2011
- It must be to pay for Stafford, Perkins, or Graduate PLUS loans (no Parent PLUS)
- You must have some sort of partial financial hardship
But what is a financial hardship? Well, it has to do with your debt-to-income ratio. In other words, if your monthly loan payment in a standard, 10 year fixed plan is more than 10% of your discretionary income, then you qualify.
PAYE is also better than IBR, in that the financial hardship is determined by whether your monthly payment in a standard, 10 year fixed payment plan is more than 10% of your discretionary income (rather than 15% with IBR).
In addition, any unpaid balance after 20 years is discharged under PAYE; under IBR, it is 25 years.
If you live in New Jersey and are struggling with payment on federal student loan debt, I may be able to be of assistance. Just download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it to determine if I can be of assistance and contact you to discuss representation.