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Can Your Student Loan Get a Bailout?

As graduates struggle to find jobs during the worst economic crisis of their lifetime, an adviser to the secretary of education has already said he expects that the default rate on student loans, which cannot be easily renegotiated or discharged in bankruptcy, will rise.
But a provision of the College Cost Reduction and Access Act of 2007 that reduces the monthly payments of hundreds of thousands of borrowers who qualify for the new Income-Based Repayment plan takes effect today. Borrowers who work in certain public service jobs could also have the balance of their loan erased after making qualifying payments for 10 years. (Supposedly, this costs the government nothing, since it will now change the way it subsidizes student-loan lenders.) Read more…

Publish date: July 2, 2009