Loyola students are eligible for two new federal government student loan repayment programs — the Income-Based Repayment and Public Service Loan Forgiveness programs, both part of the College Cost Reduction Access Act passed by the Bush administration in 2007 and became effective on July 1, 2009.

All Loyola students with direct or guaranteed loans (Stafford, Grad Plus, federal Consolidation and certain Perkins loans) are automatically eligible for both programs.
The first program is designed to make it easier for students to pay back their federal student loans by adjusting monthly payments according to income and family size.

According to the federal Department of Education, monthly payments are now determined by a calculator that computes a number based on “15 percent of the difference between the borrower’s Adjusted Gross Income and 150 percent of the Department of Health and Human Services Poverty Guidelines.”

Under the Income-Based Repayment program, if students are earning below 150 percent of the poverty level they will not have to make any monthly payments toward their loans. However, each year participants are required to submit current financial information which recalculates monthly payments. If participants continue to make monthly payments after 25 consecutive years in a timely manner, they are forgiven of any remaining debt.

One disadvantage is that students will make smaller payments on their loans, lengthening the period of time they spend paying them off and therefore increasing the amount of interest their loans gain. Despite debt inflation however, participants are not required to pay any remaining balances after 240 consecutive payments.

Giving back students who choose careers in public service after graduation may be eligible for the Public Service Loan Forgiveness program. After working full-time for a qualifying public service organization for 10 consecutive years while making continual loan payments, participants are forgiven of any remaining federal student loan debt.

Jobs which qualify as public service are determined by the Federal Student Aid Department and may range from any federal, state or government jobs to privately employed educators and public health professionals. To qualify as a full-time employee, borrowers must work at least 30 hours a week for either a single public service job or part-time for multiple public service jobs totaling 30 hours per week.

According to the Federal Student Aid Department, the Public Service Loan Forgiveness program “was created to encourage individuals to enter and continue to work full-time in public service jobs.”  

Other federal loans may be eligible under certain conditions. Students eager to determine if they qualify for these new programs should contact their loan provider or visit the Office of Financial Aid.

Alex Ackel can be reached at [email protected]