Monday, October 21, 2013

Student Loan Repayment and Forgiveness Programs


Earlier in the summer we wrote about the troubling increase in student loan debt.  As mentioned HERE, since 1999 and adjusted for inflation, tuition has increased more than 50%. As costs continue to rise, if sources of college funds fall short of what is needed, student loans are taking up more of the slack. 

According to Heather Jarvis, an expert specializing in student loan law, student loan debt has almost tripled between 2004 and 2012.  There was a 70% increase in the average balance per person.

There are programs available that may possibly help alleviate some student loan debt.  To create a customized strategy it is necessary to:

  • Review your particular records (the loan application and all associated documents)
  • Determine each specific loan type
  • Check the status of each loan

After completing these steps, it will be easier to determine if you qualify for one of the available repayment and forgiveness programs.  They are:

  • Pay As You Earn—a repayment plan for eligible Direct Loans that is designed to limit your required monthly payment to an amount that is affordable based on your income and family size.
  • Income-Based Repayment Plan—a repayment plan for the major types of federal student loans that caps your required monthly payment at an amount intended to be affordable based on your income and family size.
  • Loan Forgiveness for Public Service Employee—a repayment plan created by congress in 2007 to encourage individuals to enter and continue to work full time in public service jobs. 

The programs are explained here (insert link to summary document from R: drive) in more detail. 

While the resources presented here can be a great start, we recommend that you speak to a professional before making any decisions regarding your student loans.  If you have unanswered questions or need additional guidance please give us a call.  Paragon Financial Advisors is a fee-only registered investment advisory company located in College Station, Texas.  We offer financial planning and investment management services for clients.



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