For years I’ve been telling my audiences that for most borrowers, student loans are completed in one of two ways: you eventually pay it off or you eventually die. There were a few exceptions of course, but not many. I’ve also been reading that student loan debt will be the nation’s next financial crisis after the housing crisis is over. It appears, however, that help will soon be available for students who financed their higher education through government loans.

Effective July 1, 2009, two programs will help many borrowers. The Income Based Repayment (IBR) Plan will help borrowers with lower incomes keep their payments affordable by basing the payments on income and family size rather than the amount of the loan. And for those working in certain government or social service jobs, the Public Service Loan Forgiveness Program will forgive the remainder of student loans after 10 years of on-time payments.

Income Based Repayment (IBR) Plan:

• Available to students with most government loans, but not their parents with plus loans.
• IBR uses a form of sliding scale to determine payments. Earn below 150% of the poverty level and payments are zero.
• After 25 years of qualifying payments, the remainder of the debt is forgiven. • See if you’re eligible using the Department of Education’s fact sheet and charts.

Public Service Loan Forgiveness Program

• Available to graduates with federal student loans in the Direct Loan Program working in certain public service jobs for either local, state, or federal government or a 501 (c) (3) nonprofit organization.
• Students who have loans currently in the Federal Family Education Loan Program (FFELP), will need to consolidate their Federal Student Loans with the Direct Lending Program in order to be eligible to participate.
• Public schools, colleges, the military, AmeriCorps and Peace Corps are included. • After 10 years of qualifying payments, the remainder of the debt is forgiven. • Get more great information on loan forgiveness from FinAid.org 

Once familiar with the programs, borrowers should immediately contact their student loan servicing agent (the one sending their loan correspondence and bills) to see how these plans could help make a difference!