President Obama recently announced new rules aimed at relieving the student loan repayment burden for graduates beginning in 2012. A recent visit to whitehouse.gov reveals an impressive graphic. 1.6 MILLIONeligible for assistance under these new rules.
The new rules include:
Before we get excited about these new rules, consider this:
The Income Based Repayment (IBR) plan already exists. You can apply for the program and have your payments determined based on your income, expenses, state of residence and family size. The new rules just lower the maximum monthly payment cap for newer borrowers. Again, use these programs to help during tight money periods, but as soon as your income improves, you’d do better to revert back to a standard repayment plan. Contact your loan servicer (the company where you send student loan payments) to apply for an IBR program.
These rules do not apply to private student loan, Parent Plus loans, or loans in default.
My take: Use the any of the repayment assistance options (deferment, forbearance, graduated or income based repayments) available to avoid defaults. However, use them as a temporary measure to help until you can implement a long term strategy of debt elimination.