Anne.Oeldorf's Flickr Photostream

The College Cost Reduction and Access Act of 2007 officially goes into effect today, July 1st, and income-based repayment (IBR) applications are now available from many major lenders, including the U.S. Department of Education.

According to IBRinfo.org, you should contact your lender directly to apply for IBR.

• Check out forms and requirements for Direct Loans through the U.S. Department of Education
• To look up information about your loans including whose servicing your current loan, check out the U.S. Department of Education’s National Student Loan Data System, the government’s central database for student aid.
• For other loans, check directly with your lender.

Also, take a look at the resources mentioned in this post as well as IBRInfo.org’s FAQ.

According to IBRInfo.org, if you have exhausted other avenues and still face “serious problems” applying for IBR, contact the Federal Student Aid Ombudsman’s Office at the U.S. Department of Education: 877-557-2575, fsaombudsmanoffice [at] ed.gov, or learn more & submit your problem online at www.ombudsman.ed.gov.

Income-Based Repayment (IBR) caps monthly direct and guaranteed (FFEL) student loan payments based on the borrower’s income and family size. According to IBRinfo, “For most eligible borrowers, IBR loan payments will be less than 10 percent of their income – and even smaller for borrowers with low earnings. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.” Besides taking out the right kind of loan to start with (or consolidating your loans into the Direct Loan Program), it’s important to note that if you get married, your spouse’s income counts when calculating your monthly payment. Read more about the College Cost Reduction and Access Act here.

The other CCRAA program that goes into effect is Public Service Loan Forgiveness (PSLF) which retires the direct or guaranteed (FFEL) student loan debt of public service professionals who’ve been making ten years of qualified payments on their loans. Counting as “public service” includes 501(c)(3) nonprofit employment; government (federal, state, local, tribal), military, public school and college employment; and national service participation (like AmeriCorps and Peace Corps). Read the fine print of what counts as “qualified payments.”