Make an on-line payment; Michigan.gov Home; Financial Aid Home; Sitemap; Contact Financial Aid. Copyright 2016 State of Michigan. Pellissippi State's Financial Aid office offers three types of loans through the Federal Direct Loan Program: subsidized, unsubsidized, and PLUS. For more information about these loan programs, contact the Pellissippi State Financial Aid office. An Alternative to Obama Student Loan Forgiveness. You may know about the so- called Obama Student Loan Forgiveness program, officially known as Pay As You Earn or PAYE. Under this program, assuming you qualify, you can lower your loan payments and receive forgiveness of part of your loan after 2. But what if you don’t qualify? To be eligible for PAYE, you have to be a new borrower. According to studentaid. Oct. 1, 2. 00. 7, and received a Federal Direct Loan on or after Oct. If you already have student loan debt that precedes Oct.
PAYE. Fortunately, an alternative government program is available. It’s called Income- Based Repayment or IBR. New Borrower Not a Factor Under IBRFirst, there is no new borrower requirement under the IBR program. You can have older student loan debt (prior to Oct. This factor alone opens up IBR to many more of the 3. Americans who carry student loan debt, according to e. Credit Daily. More Loans Qualify Under IBRUnder PAYE, only Federal Direct Loans qualify for repayment. Under IBR the list is longer. In fact, most major types of federal student loans are eligible for IBR, based on information on the Federal Student Aid website. They include: Direct Subsidized Loans. Direct Unsubsidized Loans. Direct PLUS Loans made to graduate or professional students. Direct Consolidation Loans without underlying PLUS loans made to parents. Subsidized Federal Stafford Loans. Unsubsidized Federal Stafford Loans. FFEL PLUS Loans made to graduate or professional students. FFEL Consolidation Loans without underlying PLUS loans made to parents. As with PAYE, some types of loans are also not eligible for repayment under IBR: PLUS loans made to parents. Consolidation Loans that include underlying PLUS loans made to parents. Private education loans. Partial Financial Hardship. To be eligible to repay your student loans under IBR, you must demonstrate partial financial hardship. It’s not as terrible as it sounds. It’s all about debt- to- income ratio, but the easiest way to find out if you qualify is to calculate your monthly payment under IBR. The Department of Education provides an online calculator useful for determining whether you qualify for IBR. The South Carolina Teachers Loan Programs were established by the State of South Carolina to help talented and qualified students become teachers. The calculator also projects your monthly payment under the program. If your monthly payment under IBR is lower than it would be under a 1. Standard Repayment Plan, then you are eligible to repay your loans under IBR. Payments. An attraction of PAYE is that loan repayment is only 1. AGI) and 1. 50 percent of the Poverty Guideline for your family size (otherwise known as discretionary income). For IBR, the amount is 1. MFA-Student Loan Programs (MFA-SLP) has been providing access to higher education for the citizens of Michigan since 1975. Our primary objective is to provide student loan information and resources to borrowers so they may reach their education goals. Search for the lowest interest rates. An alternative loan can be your source for additional funding. Find the right program and apply today. What if you don't qualify for the Obama Student Loan Forgiveness program? Fortunately, there is an alternative government program available. It is more than PAYE’s loan repayment rate, but still less than the amount you would pay under a standard repayment plan. Forgiveness. Under IBR, if you make regular payments and meet certain other requirements, after 2. The period for PAYE is 2. IBR. Taxes on Forgiveness. As with PAYE, any regular forgiven balance under IBR is subject to income tax. Public Service Forgiveness amounts are not subject to tax.) This means that any amount the government discharges is considered income to you, and you will have to pay tax on that amount. Public Service Forgiveness. If you happen to work full- time for a public service organization and make full, regular, monthly payments for 1. IBR you may be eligible for tax- free forgiveness of the remaining balance. This is the same as the rule for PAYE, and it’s especially helpful for you if you work in public service. Interest Subsidy and Capitalization. Another advantage of the government’s student loan repayment program is the interest subsidy rule. Both Pay As You Earn and Income- Based Repayment include an interest subsidy. Under both PAYE and IBR, if your monthly payment amount doesn’t pay all of the interest due on your loan for that month, the government will pay the unpaid amount for up to three consecutive years from the date you begin repaying your loans. In addition, during the period when you have a partial financial hardship, interest not covered by your loan payments will not be capitalized (added to the principal resulting in “interest on interest”). This is true even if this happens during a deferment or forbearance. Once you no longer have a hardship, interest is added to principal and capitalized. Documentation. As with practically any government program, under IBR you must provide documentation verifying your income and family size each year. If you fail to do so, unpaid interest on your loan will be capitalized. In a larger sense, the documentation you provide helps determine any adjustments, up or down, in your monthly payment. Downside. There are two main drawbacks to IBR. First, if you make a smaller payment over a longer period (2. Second, unless you fall under the Public Service Forgiveness rule, you will probably pay income taxes on any amount forgiven after 2. Bottom Line. If you don’t qualify for Pay As You Earn, aka, Obama Student Loan Forgiveness, research the Income- Based Repayment. Lower monthly payments, loan forgiveness and the interest subsidy probably outweigh the downside of paying more over time and the possible income tax consequences – especially for you as you begin your career and probably have to keep expenses down. If you think IBR might be for you, go to Student. Loans. gov, sign in and complete the IBR Repayment Plan Request. Considering the Many Alternative College Loan Providers. Educational funding takes many forms, so students often utilize multiple financial aid resources to meet college expenses. Scholarships and grants are free- money gifts that shave college costs right off the top, but unpaid obligations often remain after gift- aid runs dry. Student loans fill the gap for under- funded applicants, but there are important distinctions to be made between available student loan options. Government- sponsored loans are the backbone of the financial aid system, with subsidized and unsubsidized versions available for undergraduate and graduate level studies. Advantages include low, fixed interest rates and flexible repayment terms. Federal Direct Loans carry rates as low as 3. Federal loans are issued without formal credit checks. They are altruistic vehicles, inherently designed to foster society’s educational development, so borrowers are held to a more relaxed standard. Unfortunately, students turning to the private loan sector are not coddled in the same way. To qualify for loans, for- profit lenders require applicants to exhibit strong credit histories. Private, alternative loans carry advantages for student borrowers who utilize them: These loans can be utilized for any type of education. Borrowed amounts may exceed the cost of education. Loans provide assistance for undergraduate, graduate, vocational and continuing education programs. For parents, alternative loans are available to help pay for private K- 1. Pros and Cons Associated With Alternative Student Loans. While scholarships and grants don’t require repayment, student loans eventually come due. To effectively manage student debt, it is important to keep borrowing levels within your means. Alternative loans are higher- priced, so indiscriminate borrowing has the potential to create difficulties after graduation. Ask prudent questions to determine your need for alternative student loans. Have you exhausted your eligibility for federal, state, and campus- specific financial aid resources? Have you applied for scholarships and grants, both general and subject- specific? Does your status as a woman or minority create additional student- specific opportunities for you? Have you factored in any college savings you’ve amassed? Will you be earning any income while you are enrolled in college? Does your post- graduate earning potential support your repayment obligations? Alternative Loan Strategy. Banks once acted as loan administrators for Stafford Loans and other federal financial aid products, but the way government loans are issued has changed. Today, student loans come directly from the William D. Ford Federal Direct Loan Program, without call for a middle- man lender to disburse the funds. As a result, private banks and credit unions are now resigned to providing alternative financing, outside the federal system. Alternative lenders define their own loan standards, so not all student aid products are created equally. These lenders have been active recently, providing alternative loans for higher education: Student banking representatives are prepared to answer specific questions about available programs. Not every lender, or alternative loan, is suited to your educational purposes. Interest rates, loan limits, repayment terms and other features each have significant impacts of the character of a given loan. Strive to match your borrower and loan program to the educational funding needs at hand. Applying for an Alternative Student Loan. Alternative student loans are more credit- based than their federally- backed counterparts. Lenders seek assurances that loans will be repaid on time, which presents a stumbling block for some students. Younger people have not engaged in extensive credit interactions – no mortgage, etc. As a result, the extent and types of credit contained on a student’s payment history are often insufficient to prove credit- worthiness to bankers. Alternative loan- seekers enjoy an oft- used borrowing option that secures required funding for college. Limited credit borrowers, like college students, are allowed to attach additional credit- worthy cosigners to their loans. Parents, relatives and helpful friends lend their own credit histories to student applications, to provide additional assurances to lenders. Loans remain the responsibility of both borrowers, until a certain number of on- time payments are made. Once a track record of consecutive timely payments is established, many lenders will release cosigners from further obligation. Repaying cosigned loans on- time provides credit- building opportunities for students, who use repayment successes as stepping- stones to favorable credit ratings.
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