How to Make Student Loan Payments Based on Your Income

U.S. Department of Education Blog - Fri, 2014-10-10 06:00

Maybe you’re just getting out of school and you got a letter from your student loan servicer about repayment, or maybe you read on a blog or in the newspaper about an income-driven repayment plan. Maybe you’re not really sure what they are, how they work, or what they could mean for you. Let me give you the fundamentals.

First, let me explain the naming. “Income-driven repayment” is an umbrella term for three different repayment plans available to those with federal student loans:

  • The Income-Based Repayment Plan
  • The Pay As You Earn Repayment Plan
  • The Income-Contingent Repayment Plan

Notice how the names of all three plans reference “income” or “earnings”? Well, that’s because, under these plans, your payment amount is based on how much money you make. To really understand the differences between income-driven and “traditional” repayment plans, you must understand how your payment amount is calculated under each type of repayment plan.

How Monthly Payments Are Calculated

“Traditional” repayment plans are those such as the Standard and Extended Repayment plans. These traditionalists take three variables—the interest rate, principal balance, and repayment period—and determine the least amount of money that you can pay each month to pay the loan off by the end of the repayment period (usually 10-25 years, but sometimes as much as 30 years). This means that borrowing more, having a higher interest rate, or having a shorter repayment period will increase your monthly payment (and vice versa). Those three variables are all the traditional repayment plans care about—they don’t care if you can afford that payment, they just want your loan to be paid off within a specific time frame.

Income-driven repayment plans take these variables and stand them on their heads. These plans say, “you’ll pay what you can afford: a percentage of your ‘discretionary income’” (hint: that’s something less than your total income). Depending on the plan, that may be 10%, 15%, or something else. What you ultimately pay depends on the plan you choose and when you borrowed, but in all cases, it should be something you can afford. Sometimes, it can be as low as $0 per month.

Student Loan Forgiveness and the Income-Driven Repayment Plans

Because your payment under the income-driven repayment plans is not calculated to ensure that your loan is paid off within a specific time frame, the plans have another special feature: loan forgiveness. These plans do have a repayment period—20 or 25 years. However, it’s not the point at which your loan must be paid off; instead, it serves as a counter toward loan forgiveness. Under these plans, if your loan is not repaid in full at the end of your repayment period—20 or 25 years—then the remaining balance will be forgiven. Let me be clear: this is not to say that everyone who selects an income-driven repayment plan will receive forgiveness. You may end up paying your loan off in full before you’re eligible for some forgiveness. Because your payment is based on your income, your payment changes when your income rises (or falls). Your income is the “x” factor, and we don’t know what will happen to it in the future. Under these plans, then, you may pay your loan off in full, or not, but the income-driven repayment plans are happy either way.

What else affects whether you will receive loan forgiveness? Well, it’s those familiar variables of loan balance and interest rate. Remember, interest accrues each day on whatever your principal balance is. The income-driven repayment plans do not change this fact. So, even though your payment isn’t related to how much interest is accruing, that interest still accrues and must still be paid before you can pay down the principal balance on your loan. Ultimately, because your payment is less than it would be under another plan and may even be less than the amount of interest that accrues on your loan, then you will pay down your principal balance more slowly and increase the likelihood of receiving loan forgiveness. This also means that your loan will cost you more over time. Does this mean that you shouldn’t choose an income-driven repayment plan? Of course not! But, I wouldn’t be doing my job if I didn’t explain that there was some sort of cost to receiving this benefit.

Disclaimers

To be a good bureaucrat, I need to give you a few disclaimers before I wrap this up:

  • If you receive loan forgiveness under an Income-Driven Repayment Plan, it may be considered taxable income by the Internal Revenue Service.
  • The Income-Based and Pay As You Earn Repayment plans both have an eligibility criteria that tests to see whether you “need” to enter the plan—this test checks how much federal student loan debt you have relative to your income.
  • There are loan-based eligibility criteria that I didn’t even mention, but know that these plans are only available for federal student loans—loans made under the Direct Loan and Federal Family Education Loan Programs, to be specific.
  • If you are married, how you file your federal income tax return matters; sometimes it matters a lot.

How to Apply

In closing, let me give you some actionable steps that you can take:

  • Use the Repayment Estimator to model your eligibility and payment amount for an income-driven repayment plan.
  • If you have still questions, call your loan servicer and discuss whether one of these plans is a good fit for you.
  • Apply online at StudentLoans.gov. Because this stuff is complicated, check the box that allows your loan servicer to put you on the income-driven repayment plan with the lowest monthly payment amount.

The English language was not marred through the use of acronyms in this blog post. Ian Foss has worked for the Department of Education since 2010, and, thanks to the Income-Based Repayment Plan, has been able to eat more than just ramen noodles since he finished school.

Categories: Higher Education News

Seeking Help at a Campus Counseling Center? Take a Number

Chronicle of Higher Education - Fri, 2014-10-10 02:56

As the centers experience more demand for their services, the wait lists are getting longer.

Categories: Higher Education News

NIH Awards $32-Million to Tackle Big Data in Medicine

Chronicle of Higher Education - Fri, 2014-10-10 02:55

The grants, to some two dozen universities, are intended to bring researchers innovative ways of handling the huge data sets seen as critical to future discoveries.

Categories: Higher Education News

Education-Degree Programs, Once Popular, Take a Nosedive

Chronicle of Higher Education - Fri, 2014-10-10 02:55

Colleges are scrambling to lure back students after states slashed teacher hiring and dropped the pay bump for those with master’s degrees.

Categories: Higher Education News

Carnegie Classification Will Get a New Home—and Influence From Lumina

Chronicle of Higher Education - Thu, 2014-10-09 13:43

The next edition of the widely used system will be "informed" by the foundation's Degree Qualifications Profile, and will be run out of Indiana University at Bloomington.

Categories: Higher Education News

Reporter With a Passion for Investigative Journalism Wins Chronicle Prize

Chronicle of Higher Education - Thu, 2014-10-09 12:35

Dan Bauman received the David W. Miller Award, given in honor of a reporter killed 12 years ago by a drunken driver.

Categories: Higher Education News

U. of Michigan Extends Novel System of Seed Money for Research

Chronicle of Higher Education - Thu, 2014-10-09 12:05

The "MCubed" program offers $60,000 credits that can be redeemed only if three faculty members, including one in a different field, work together.

Categories: Higher Education News

Engaging Families, Ensuring Education Success: A Back-to-School Tour with the White House Initiative on Educational Excellence for Hispanics

U.S. Department of Education Blog - Thu, 2014-10-09 11:23

In Springdale, Arkansas, the Hispanic population grew by more than 150 percent between 2000 and 2011, largely driven by the arrival of mostly Hispanic immigrants. The school district’s public school population is now 44 percent Hispanic, and its English Learner population is also 44 percent of students. The city has done a remarkable job of embracing their newest community members and ensuring that all students and families are supported.

As part of ED’s Back-to-School Bus Tour, the White House Initiative on Educational Excellence for Hispanics (WHIEEH) visited Springdale to learn about the city’s community integration efforts. For the visit, WHIEEH collaborated with the Cisneros Center for New Americans, an organization that works to accelerate the integration of new Americans into American society. One stop was at an early childhood center where newly enrolled families pose for portraits that are placed in the classroom, to help ease the child’s transition and alleviate separation anxiety. Coffee sessions between new and veteran parents help familiarize families with the center and the community.

Another stop included the Turnbow Elementary School family literacy program where parents attend English language classes and scheduled PAC or “Parent and Child” time, in which parents join their children in class. They also learn about other subjects, including safety and financial assistance, from community partners such as the police and fire departments and local banks.

A mother described the program’s impact on her and her daughter: “When I signed up for this program, I saw my daughter with a huge smile, so I know it really mattered to her that I was in it,” she said.

At the Language Academy at Har-Ber High School, newly arrived students write their aspirations on classroom walls. These not only remind students to work hard, but they also provide instructors with daily reminders of their own role in helping all students reach their full potential.

The Academy has served to support integration into the larger community.

“The Language Academy helped me communicate with other people,” one student said. “At first, I didn’t know the basics …and now I’m in a regular class. I know all the things that the teacher tells me, and how they teach me and help me so much.”

A town hall for leaders from throughout the community provided context for the school district’s work. Superintendent Jim Rollins provided an overview of the district’s comprehensive efforts and a panel of experts discussed best practices on immigrant integration.

“Education is the great equalizer – quality education is accessible to immigrant families in Springdale,” said Professor William Schwab, University of Arkansas.

Throughout the tour, it was evident that efforts to break down language barriers and motivate students to succeed in and out of the classroom are making a difference.

Springdale’s family engagement and integration vision and efforts were recognized in a Race to the Top-District grant award in 2013. The program helps localities develop plans to personalize and improve student learning, increase educational opportunities, and provide resources that lead to a high-quality learning experience.

The program has enabled Springdale to provide 100 additional preschool slots to the community’s children and draw up plans to expand their family literacy program to each of their 30 schools.

The commitment to immigrant integration through family engagement is in the soul of the Springdale community. Superintendent Rollins put it best: “Those are the kind of things that can happen when you embrace children and help them find their true potential and promise.”

Emmanuel Caudillo is a Special Advisor for the White House Initiative on Educational Excellence for Hispanics.

Categories: Higher Education News

Colleges Walk a Fine Line When Athletes Are Accused of Sexual Assault

Chronicle of Higher Education - Thu, 2014-10-09 02:55

Institutions want the public to know they take the accusations seriously. They also want to be fair to their players.

Categories: Higher Education News

5 Flaws in the High-Stakes 'Gainful Employment' Rule

Chronicle of Higher Education - Thu, 2014-10-09 02:55

The Education Department is set to release the final rule this month. If it sticks to its draft version, it might punish some good programs and overlook some poor ones.

Categories: Higher Education News

Lumina Looks to Expand Use of Framework to Track Student Learning

Chronicle of Higher Education - Thu, 2014-10-09 02:55

The foundation has spent three years testing its standards; now it’s hoping to get more institutions to adopt them.

Categories: Higher Education News

When Is a Student ‘First Generation’? Words Fail Us

Chronicle of Higher Education - Thu, 2014-10-09 02:55

Parents’ level of education strongly predicts how their offspring will perform at college. But defining that status proves elusive.

Categories: Higher Education News

Making the Finances of Green Schools Work in Minnesota

U.S. Department of Education Blog - Wed, 2014-10-08 11:14

Note: U.S. Department of Education Green Ribbon Schools recognizes schools, districts and postsecondary institutions that are 1) reducing environmental impact and costs; 2) improving health and wellness; and 3) teaching environmental education. To share innovative practices in these three ‘Pillars,’ the Department conducts an annual Green Strides Best Practices Tour of honorees.

Safeguarding the environment for future generations is a laudable goal, but when you’re managing a fast-growing school district’s bottom line, you need to also know that trying to do this makes financial sense. In the Waconia Public School system we’ve learned that going green can be the fiscally prudent path. Providing safe, healthy and sustainable learning spaces does not have to be an expensive choice, but it does require collaboration, creative problem solving, and a shared vision to do what is right for students, staff, community and the planet.

At Waconia Public Schools, we approach resource conservation, environmental education, and wellness with innovative and cost-effective solutions. Our Director of Finance and Operations worked with our school board to approve a financing plan that allows us to use conservation cost savings, energy rebates and other incentives to pay for additional environmental and energy conservation improvements. The Waconia School District qualified for $46,000 in energy rebates, and we’re saving an estimated $117,000 in utility and operations costs annually as a direct result of these improvements. Our district also saves over 1.2 million gallons of water, nearly one million kilowatt hours of electricity, and over 17,000 therms of gas annually.

Waconia Public Schools approaches resource conservation, environmental education, and wellness with innovative and cost-effective solutions. (Photo credit: Waconia Public Schools)

The success of our conservation initiatives relies not only on smart financing, but on sophisticated monitoring equipment, on careful analysis of resource use, and on always keeping an open mind about lower environmental impact solutions. Our district began by getting a handle on its resource use through auditing, analyzing, and monitoring usage among all of its facilities. We work closely with environmental engineers at B3 Benchmarking to improve conservation and efficient use of resources. We identify opportunities to save money on utility costs by re-tuning existing equipment and installing resource-efficient equipment.

We also actively engage in partnerships to create efficiency in scale and help secure alternative funding. For example, we recently partnered with the City of Waconia and Carver County to secure a grant from the Minnesota Board of Water & Soil Resources to install a water reuse system to capture untreated storm water and reduce pollutants entering Burandt Lake adjacent to Bayview Elementary. This project combined with other water quality initiatives will result in Burandt Lake being “delisted” from the State Impaired Waters list within 5 years. The collected water is also used to irrigate our nearby athletic fields.

Our most recent collaborative project is with Minnesota Department of Commerce, Xcel Energy, JJR Power, and Innovative Power Systems to install solar panels on our high school gymnasium. These solar panels will produce 50,000 kilowatt-hours of energy – or about 5% of total annual energy usage at Waconia High School – without costing the district a dime for their installation. JJR Power will provide the capital to install the system. It is financed through a combination of the “Made in Minnesota Solar Incentive Program,” Federal tax credit, MACRS depreciation and the execution of a 15-year Power Purchase Agreement.

These are just a few of the partnerships that are helping Waconia Public Schools to develop, improve and sustain programs that reduce environmental impact, promote health, and equip students with a solid foundation of environmental literacy. At Waconia, it’s about being good stewards of all our resources, both financial and environmental. For a school district wishing to save money, environmental conservation simply makes fiscal sense.

Richard Scott is Director of Grants & Development at Waconia Public Schools.

Categories: Higher Education News

All Big Things Start Small

U.S. Department of Education Blog - Wed, 2014-10-08 11:06

Note: U.S. Department of Education Green Ribbon Schools recognizes schools, districts and postsecondary institutions that are 1) reducing environmental impact and costs; 2) improving health and wellness; and 3) teaching environmental education. To share innovative practices in these three ‘Pillars,’ the Department conducts an annual Green Strides Best Practices Tour of honorees.

Recently I was at Edgewood School in Prior Lake, Minn., where preschoolers were sitting on tiny tree stumps in an outdoor classroom custom-made just for them. They loved their little chairs and were completely engaged in the morning meeting with their teacher. Seeing these littlest ones learning so effectively in nature got me thinking about how one small initiative can grow into something much bigger.

Preschool students at Edgewood School have the option to enroll in Prior Lake-Savage Area Schools’ nature-based preschool. (Photo credit: Prior Lake-Savage Area Schools)

The Environmental Education (EE) programs at Prior Lake-Savage Area Schools started out in just this way: one small effort at one school. Yet this year we found ourselves showcasing our districtwide EE programs during the recent Green Strides Best Practices Tour of Five Hawks and Jeffers Pond Elementary.

On any given day in Prior Lake-Savage Area Schools, you will find teachers and students outside, certainly for recreational activities – but also for science, math, reading, even art. Environmental Education is embedded into nearly all curricular areas, districtwide.

Visitors often ask, “How did you make this happen in all of your schools?” The answer is, we started small. Five Hawks Elementary set the stage for EE programming with teachers who are passionate about helping students build critical thinking skills, fostering a love for the environment and getting students outdoors.

One of the first things they did was plan an annual Outdoor Learning Festival, where students do hands-on activities, taking water samples, studying leaf structure and entomology, and much more.

The success of that program got a lot of attention and led staff, parents and school board members to embed environmental education into our district’s Strategic Plan, which will guide the expansion of our environmental focus.

Now EE also takes place through Community Education classes and student clubs in grades 3-12. Yes, students choose to be part of EE outside of the school day! Students will tell you it’s “cool” to be in these clubs. In fact, students have to apply to be in the programs because there is so much interest. At the high school level, students can even earn a varsity letter for their participation in the EcoTeam club.

Today all six of our elementary schools host an Outdoor Learning Festival each year, like the one we showcased on the Green Strides Tour. But beyond the Festivals, EE is truly “embedded” into our curriculum throughout the school day, every day. We have become the first district-wide E-STEM schools in the state of Minnesota.

Throughout all of this, our Strategic Plan has been our guide. We are grateful to the many innovative teachers who have made E-STEM a reality and for the students who are such enthusiastic learners. On the days I witness programs like the one at Edgewood, I am reminded that all big things start out small.

Dr. Sue Ann Gruver is the Superintendent of Schools for Prior Lake-Savage Area Schools in Minnesota

Categories: Higher Education News

President Longanecker quoted in "Seek affordability in Minnesota higher ed" (10/8/2014)

WICHE in the News - Wed, 2014-10-08 10:43
Minnesotans are accustomed to being called above average. That put higher education analyst David Longanecker on solid ground with a St. Paul audience last Wednesday as he described this state as “a bit above average” in its support for public higher education.
Categories: Higher Education News

New Digital Strategies Needed to Recruit Foreign Students, Report Says

Chronicle of Higher Education - Wed, 2014-10-08 09:22

Among other recommendations, the study suggests American universities should make sure their websites and recruitment materials are able to be accessed on mobile phones.

Categories: Higher Education News

Student Loan Forgiveness (and Other Ways the Government Can Help You Repay Your Loans)

U.S. Department of Education Blog - Wed, 2014-10-08 06:00

Have you heard or read about student loan forgiveness? Are you wondering what it is or if it is really possible? Perhaps you already know a little about it and you want to find out if you qualify. Well, you’ve come to the right place. We’ll provide answers these questions and tell you where you can go to learn more.

What is loan forgiveness?

Loan forgiveness is the cancellation of all or some portion of your federal student loan balance. Yes, that’s right—cancellation of your loan balance. If your loan is forgiven, you are no longer required to repay that loan.

Is it really possible to have your student loans forgiven?

Yes. However, there are very specific eligibility requirements for each situation in which you can apply for loan forgiveness. If you think you may qualify, it’s definitely worth investigating.

How do I get my loans forgiven?

There are a number of situations under which you can have your federal student loan balance forgiven, and we’ve provided a few in this post. You will, however, want to research your options at StudentAid.gov/repay and contact your loan servicer for any questions you may have about student loan forgiveness.

A couple examples of situations in which your federal student loans may be forgiven include:

  • Teacher Loan Forgiveness: If you teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on certain federal student loans. For details about this program, see Teacher Loan Forgiveness.
  • Public Service Loan Forgiveness (PSLF): If you work full-time in certain public service jobs you may qualify for forgiveness of the remaining balance of your Direct Loans after you’ve made 120 qualifying payments on those loans—that’s usually about 10 years of payments. Serving in the Peace Corps or AmeriCorps is considered qualifying employment. To benefit from PSLF, you should enroll in a repayment plan that bases your monthly payment on your income. Learn more about income driven repayment plans. For loan repayment and borrower eligibility requirements, see Public Service Loan Forgiveness.

There are additional situations that allow you to apply for cancellation of your federal student loans. For example, if you are totally and permanently disabled, a member of the U.S. armed forces (serving in area of hostilities), a member of the Peace Corps, or a law enforcement or corrections officer, you may be eligible for cancellation of a portion of your federal student loan. Learn more about how you may qualify for loan forgiveness and contact your loan servicer with questions.

Are there other ways in which I can get help repaying my loans?

There are additional government programs that provide student loan repayment assistance for individuals who provide certain types of service. A couple examples include:

  • Military Service: In acknowledgement of your service to our country, there are special benefits and repayment options for your student loans available from the U.S. Department of Education and the U.S. Department of Defense. Learn about federal student loan benefits for members of the U.S. Armed Forces.
  • AmeriCorps: The Segal AmeriCorps Education Award is a post-service benefit received by participants who complete a term of national service in an approved AmeriCorps program—AmeriCorps VISTA, AmeriCorps NCCC, or AmeriCorps State and National. An AmeriCorps member serving in a full-time term of national service is required to complete the service within 12 months. Upon successful completion of the service, members are eligible to receive a Segal AmeriCorps Education Award which can be used to pay educational costs at eligible postsecondary institutions, as well as to repay qualified student loans. 

Remember, there are resources available to help you repay your loans. In addition to loan forgiveness and other benefit programs, you also have other options (including repayment plans that are based on your income) if you find yourself in a situation where you’re having trouble making your loan payments. Be sure to discuss your options with your loan servicer.

Lisa Rhodes is a writer at the Department of Education’s office of Federal Student Aid.

Categories: Higher Education News

Should the Education Dept. Start Collecting Its Own Debts?

Chronicle of Higher Education - Wed, 2014-10-08 02:56

The agency will soon award its lucrative student-loan-collection contracts, some of which will go to companies that have allegedly violated consumer-protection laws.

Categories: Higher Education News

Challenged by Upstarts, UMUC Considers Switch to Nonprofit Status

Chronicle of Higher Education - Wed, 2014-10-08 02:55

The University of Maryland University College, fearing it has lost its mojo as a dominant player in online education, looks to make a big change.

Categories: Higher Education News

Joplin High School: A Living Symbol of the Community’s Values

U.S. Department of Education Blog - Tue, 2014-10-07 13:48

Secretary of Education Arne Duncan gives remarks and introduces Vice President Joe Biden at the Joplin High School Homecoming and Ribbon Cutting ceremony, in Joplin, Missouri, Oct. 3, 2014. (Official White House Photo by David Lienemann)

The tornado that hit Joplin, Missouri, on May 22, 2011 lasted 32 minutes and caused damage for 13 miles. At its widest point, the path of the tornado stretched a full mile. The EF5 Tornado — the most destructive on the Enhanced Fujita Scale — left a city nearly destroyed. More than 15,000 vehicles were carried away, nearly 7,000 homes were completely destroyed, and 161 people lost their lives.

The destruction of Joplin High School took place just minutes after a graduation ceremony for seniors. The ceremony was held off campus, at Missouri Southern State University. When the tornado hit, around 150 people were still in the arena, and Dr. Kerry Sachetta, the high school principal, led those individuals into the basement. But others were already on the road or back in their homes. The tornado claimed the lives of seven students (including one of the graduates) and one high school staff member.

In the months following the tornado, Secretary Arne Duncan joined then-Secretary of Homeland Security Janet Napolitano to tour the city and the destroyed high school, and last week, Duncan returned to Joplin with Vice President Joe Biden for the dedication of the new state-of-the-art Joplin High School/Franklin Technology Center.

Secretaries Duncan and Napolitano and FEMA Deputy Administrator Serino visited Joplin in Sept., 2011. (Photo credit: U.S. Department of Education)

Referring to his previous visit three years ago, Secretary Duncan spoke of how he left inspired and full of hope, and that he is not surprised at Joplin’s dramatic recovery. “In that one day [in 2011], I had some sense of the fiber and character of this community,” he said.

“It would have been much easier to build a high school that just built upon what was here in the past. This community decided that the children of Joplin deserved something much better. So they built a high school not for yesterday, not for today, but for tomorrow. In blending vocational education and college education, [and] making sure we’re not tracking children into one path or another, but giving them the option to develop for college and for careers.”

Going forward, many of Joplin’s graduates will enter college with two years of college credit under their belt, saving students and their families thousands of dollars in tuition.

“This is a vision of what high schools all across America should be doing and can be doing.”

The new Joplin High School/Franklin Technology Center isn’t just a new building, but a new vision of education for the community’s students. The opening also marked the launch of the Career Path curriculum. Students attending JHS/FTC can choose one of five Career Paths, which are developed and implemented by school, community, and business representatives, centered on core foundational knowledge and skills, plus the soft skills employers demand from their employees.

“But as powerful and as inspiring as this high school is,” Duncan said during the dedication homecoming. “For me, the building is simply a living symbol, a physical manifestation, of this community’s values.”

Cameron Brenchley is a Senior Digital Strategist for the Office of Digital Strategy at the White House.
Categories: Higher Education News
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