July 30th, 2009 
Elisheva Wiriaatmadja Beginning July 1, 2009, borrowers of student loan can take a deep relieved breath. Starting that date, a new income-based repayment options will be available to allow certain lower income people in student loan debt with federal student loans to make monthly payments on how much they earn and not how much they owe.
If you are have college loans you need to repay and are able to demonstrate partial financial hardship, then you will be able to cut down your payment to 15% of your “discretionary” income. The definition of discretionary income is the amount by which income exceeds 150% of the federal poverty level and taking family size into account. If your income falls below 150% of the federally defined poverty level, you will be eligible to suspend payments.
Let’s assume that your gross income is $25,000 and your student loan repayment is about $288 per month. With the new income based repayment option, you will only have to pay $110 per month.
The goal of this new income based repayment option is to give borrowers who are deep in debt and has low income to repay their debt but not having to struggle with monthly payments as much so that they finally succeed in repayment. This income based repayment option will be available starting July 1st, 2009 to all qualifying borrowers with federal Stafford, Grad PLUS and consolidation loans that are still in good standing. To determine whether you are eligible for this option, the federal government will look into your income information that you provide your lender every year. If you qualify and your income rises, your monthly payments will also rise.
To change your standard student loan repayment to income-based repayment, simply contact your lender. If you are currently sending your loan payments to Great Lakes, you can ask for income-based repayment by calling Great Lakes’ Borrower Services. If you are not sure whom you should contact, find information on your lender here at the National Student Loand Data Center.
Click here to read more about Income-based Repayment option.
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That is some pretty useful info, I’ve been looking into student loans and this is good to know for low income earners.
[...] the new Income-based Student Loan Repayment program that began July 1, 2009, students now have the chance to cut down their monthly payments to 15% of [...]