Options provide student loan relief Payback forgiven, or at least eased, in new programs

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Options provide student loan relief
Payback forgiven, or at least eased, in new programs
JOSH VERGES • JVERGES@ARGUSLEADER.COM • AUGUST 12, 2009


When he graduated from South Dakota State University in spring, Geoff Nixon had more than $20,000 in student loan debt and little hope of quickly finding work in his field.

After studying communications and theater in college, he has spent the summer working at a coffee shop and a bank, saving money for next month's move to New York City, where he hopes to scrape together a living in theater. The first student loan bill comes due in November.

"It's not even in my mind yet like it should be. It's kind of a daunting idea," Nixon said.



Two federal programs that began last month aim to ease the burden for college graduates with high debt loads and little income.

For many students, the Income-Based Repayment program reduces monthly payments and lets them spread out the payback of government loans over as many as 25 years. Those earning no more than 150 percent of the federal poverty level - or up to $16,245 this year - won't have to make any payments until they start earning more. And any remaining debt after 25 years will be canceled and counted instead as taxable income.

A second program, Public Service Student Loan Forgiveness, helps those working in government and other public service jobs. If the borrower makes 10 years of payments, the balance of the loan will be forgiven with no tax penalty.

"The breathing room that comes with this will allow college graduates to pursue a career that they're really passionate about rather than just one that pays well," said Gregory Cendana, president of the U.S. Student Association, a student advocacy group based in Washington, D.C.

Congress created both programs in 2007, but they didn't start until last month.

Cendana said the timing is good: The low payments will help students contribute to the economic recovery. Two-thirds of last year's graduates from four-year colleges and universities had student loan debt, according to a government study. And the amount of debt averaged $23,200, a 24 percent increase over 2004.

"It's really a huge step that U.S.S.A. has been working at for years," Cendana said.