By DELANIA TRIGG

Register Staff Writer



Former college students stuck with high student loan payments may soon have a reason to rejoice.

Beginning Wednesday, the U.S. Department of Education is expected to begin phasing in changes in the way borrowers repay their student loans.

Gone are the sky-high payments and the prospect of years of mounting debt.

The changes are part of 2007’s College Cost Reduction Act.

Under the measure, most borrower’s monthly payments would be capped at less than 10 percent of their gross income for the next 25 years of their working lives.

After 25 years, any remaining debt would be forgiven.

Another repayment program allows borrowers to make income-sensitive payments and have their loans forgiven after working 10 years in certain fields including government services, education and the nonprofit sector.

According to the Associated Press, eligibility for income-based payments will be based upon the borrowers’ incomes and the amount of their loans.

The new program is designed to encourage middle to low income students to go to college without fear of racking up huge debts .

Student loan nightmares have even made some wonder if a college degree is worthwhile.

Beth — who asked that her last name not be printed — said she sometimes wonders if her liberal arts degree is worth the economic hassles she’s endured since she graduated in the early 1990s.

“I was a single mom with a small child and I was desperate. I needed the loan money to get a car, to pay tuition, to pay my rent and, a lot of times, to buy food,” she said. “I was able to get my loans deferred for a while and after that, I just kind of tried to ignore them.”

Her original loan amounts were fairly modest —approximately $22,000. Fifteen years later, those loans had ballooned to over $60,000.

“I was appalled when I finally had to face the amount of debt I had. I know I have to pay it back. I always knew that, but I thought the payments would be based on my income and I don’t make a lot of money. I feel really stupid and also angry. The government can bail out private companies and CEOs can spend a million dollars to decorate their offices, and I can’t even get my student loan payments reduced,” she said.

Payment reduction is another aspect of the new program.

Lower monthly payments are expected to provide relief for borrowers with modest incomes who have been struggling for years to overcome student loan debt.

However, the program is not for everyone.

Although students would be allowed to lengthen their repayment schedules and lower their monthly payments, interest will continue to accrue, possibly making the loan more costly in the long run.

In addition, the 25 year forgiveness guarantee would not affect the borrowers repay their loans in less than 25 years.

And not all student borrowers are eligible for the program.

Loans issued by private financial institutions are excluded as are Parent PLUS loans.

Even with their potential limitations, the new repayment programs should be welcome news to millions of Americans struggling to meet their student loan obligations.

The U.S. Department of Education can seem a relentless foe when it comes to student loan collection.

The agency can order borrowers’s wages garnished regardless of the individual’s income or familial obligations.

It can also offset and seize income tax refunds, making many single parents and low-income individuals ineligible for earned income credit at tax time.

Moreover, most student loan debt cannot be discharged through bankruptcy.

Student loan debt has become a monster for some borrowers, even those with higher paying jobs.

Fed up with crippling student loan payments, New York attorney Robert Applebaum created a Facebook group for individuals who believe the Department of Education should forgive outstanding student loans and allow borrowers to pump their cash back into the economy.

“Forgiving student loan debt would have an immediate stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands, of extra dollars per month to spend, fueling the economy now,” Applebaum’s writes in his Facebook blog.

Newark resident Brian Raney has a different view of the student loan issue.

He said it took an IRS tax refund seizure to wake him up to his obligation.

“We had all these plans for the income tax money. We were going to pay off some bills, go camping at Beaver's Bend, get everything squared away. When we went to an income tax preparer they said there was a hold on our refund. Then the IRS sent us a letter saying our refund was being applied to my old student loan,” Raney said.

Eventually his wages were garnished.

But gradually, his debt dimished.

“You know what? I got to watch my debt get paid down. At last, I got it paid off and got to send a letter to the credit bureaus asking them to note that the debt was paid in full. It felt pretty good,” he said.

On the Web:

To find out if you could qualify for new student loan repayment options see http://www.ibrimfo.org or http://www.studentaid.ed.gov.