Student Loan Repayment Program

July 1, 2009 10:35:20 PM PDT
If you have a federal student loan and are having a hard time making payments, there's a new program that can help.                        |   Loan Repayment Program Calculator   |

It targets people with modest incomes, and in some cases may even forgive your loans after just ten years.

David Del Mundo just graduated from Fresno State in May with a Masters Degree ... and thought he had an on-campus counseling job lined up.

David Del Mundo said, "The CSU just couldn't justify adding another position when there's a big potential for trying to lay off so many people."

So he's left looking for work in a bad economy, and his first student loan payment is due in five months.

David said, "Honestly, if I can pay 500 a month and get this taken care of as soon as possible that would be my ideal situation but realistically if I don't get a job equivalent to what I'm hoping to make then I may have to do a different kind of pay-back plan."

A new income-based repayment program could help thousands of students like David repay their federal students loans.

Fresno State Financial Aid Director Maria Hernandez said, "They are trying to recognize the fact that students still want to meet their obligations but they may not be able to do it at the level that they are scheduled to do it."

The program is run by the Department of Education, and recalculates a student loan based on income and loan amount.

It stretches repayment over a longer period of time, so that monthly payments do not exceed 10% of a person's income.

Gloria Rubio said, "It might be a good alternative to the stress of graduating and not being able to pay it off."

Sonoma State student Gloria Rubio estimates she'll owe about $40,000 by the time she graduates with a double major in art and psychology.

Because the program forgives remaining balances after 25 years ... or after just 10 years for those choosing to work in public service ... Gloria has considered switching majors and going into teaching.

"It's competitive and difficult getting any job, much less what I want to do," said Rubio.

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