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Feds offer programs to help deal with college debt

 
In December, the Department of Education launched its eighth college-loan repayment program, dubbed the Revised Pay As You Earn Plan.
In December, the Department of Education launched its eighth college-loan repayment program, dubbed the Revised Pay As You Earn Plan.
Published May 7, 2016

PHILADELPHIA

There's yet another way to pay back student loans without going broke. It's called REPAYE. In December, the Department of Education launched its eighth college-loan repayment program, dubbed the Revised Pay As You Earn Plan.

An older program, Pay As You Earn, caps payments at 10 percent of a borrower's monthly income and forgives any remaining balance on student loans after 20 years of qualifying repayment. But PAYE was only for borrowers as of October 2007. REPAYE expands the option to anyone with federal student-loan debt. (Private student-loan debt is a whole other nightmare.) REPAYE also limits monthly loan payments to 10 percent of discretionary income — the difference between your adjusted gross income and 150 percent of the poverty level for your state and family size.

To enroll in the program, visit studentaid.gov/idr.

Why isn't there just one way to pay back loans?

Craig Lemoine, associate professor of financial planning at the American College of Financial Services, agrees the system is way too complicated.

However, "as college got more expensive, the government expanded these repayment programs to make them more sensitive to income."

REPAYE is "the most flexible," he says. "It's the newest, and almost everyone is eligible," including recent borrowers and past borrowers.

"It takes into account singles who can't find a job right away or work at Starbucks and those with families," he adds.

Still no luck? If you've contacted your loan servicer and still don't have a way to pay your student loans, the Department of Education has a Federal Student Aid Ombudsman Group you can contact.

The Ombudsman Group is a neutral and confidential resource to help resolve disputes about federal student loans.

By mail, write to: U.S. Department of Education, FSA Ombudsman Group, Box 1843, Monticello, Ky. 42633. By phone: Toll-free at 1-877-557-2575.

Seeking financial aid? Whatever you do, don't pay to find financial aid.

We've seen TV-advertised services and websites offering paid help filing the Free Application for Federal Student Aid, or FAFSA, for a fee.

These sites are not affiliated with or endorsed by the Department of Education.

The official form is available at fafsa.gov, and you can get free help from the financial aid office at your college or the college you're thinking about attending.

If you are asked for your credit-card information while filling out the FAFSA online, you are not at the official government site. Remember, the official website has the .gov suffix.