For those of you young dreamers who work for government or for nonprofits, you may be able to get a portion of your student loans forgiven. A lawyer friend sent me this information on the program:
Student Loan Forgiveness for 501(c)(3)s and Public Sector Employees
On September 27, 2007, President Bush signed into law the College Cost Reduction and Access Act (HR2669). In addition to a number of provisions providing financial and debt repayment support to current or past college students, the bill establishes a loan forgiveness program for individuals working for 501(c)(3) nonprofit organizations or in government. The loan forgiveness program allows the Secretary of Education to forgive 1/10th of the balance of federal student loans held by 501(c)(3) or public sector employees for each year of the repayment period in which their income was less than $65,000. This program applies to all public service employees(including employees of 501(c)3's)who:
The Department of Education is currently working out rules and regulations for implementing this program. The current timeline is for those regulations to be published in a few months. These regulations will answer more specific questions, such as: what payment schedule will allow individuals to qualify, the process for obtaining loan forgiveness, and other miscellaneous administrative issues. Visit www.ed.gov for more information or to obtain the specific regulations when they are made public.
Who benefits?
Student Loan Forgiveness for 501(c)(3)s and Public Sector Employees
On September 27, 2007, President Bush signed into law the College Cost Reduction and Access Act (HR2669). In addition to a number of provisions providing financial and debt repayment support to current or past college students, the bill establishes a loan forgiveness program for individuals working for 501(c)(3) nonprofit organizations or in government. The loan forgiveness program allows the Secretary of Education to forgive 1/10th of the balance of federal student loans held by 501(c)(3) or public sector employees for each year of the repayment period in which their income was less than $65,000. This program applies to all public service employees(including employees of 501(c)3's)who:
- Have not defaulted on their loans
- Have made monthly payments on their loans for 120 consecutive months after October 1, 2007
- Were employed full-time with a 501(c)(3) or in the public sector during the entire 120 months during which they made their payments
The Department of Education is currently working out rules and regulations for implementing this program. The current timeline is for those regulations to be published in a few months. These regulations will answer more specific questions, such as: what payment schedule will allow individuals to qualify, the process for obtaining loan forgiveness, and other miscellaneous administrative issues. Visit www.ed.gov for more information or to obtain the specific regulations when they are made public.
Who benefits?
- If you work for the government or a 501(c)(3) nonprofit and you make payments for 10 years beginning October 1, 2007, then the balance of your debt will be forgiven if you made less than $65,000 for the entire period.
- If you made more than $65,000 during any of those 10 years, then you will only receive loan forgiveness equal to 1/10th of the remaining debt for each year in which you were below that income threshold. For example, if you made greater than $65,000 for 2 of those 10 years, then your total loan forgiveness would equal 80% of the remaining balance.
- If you have existing student loans on which you are currently making payments, you can still participate in the program. However, this will only benefit you if your repayment schedule is longer than 10 years as of October 1, 2007.
- If you changed jobs during that 10 year period and are employed by a job in the for-profit private sector, you no longer qualify for the loan forgiveness program. The 10 year repayment period would effectively restart if you returned to the nonprofit or public sector.
- If your current repayment schedule is shorter than 10 years as of October 1, 2007.
- If your current repayment schedule is longer than 10 years as of October 1, 2007, but your income is greater than $65,000