A discussion of economic hardship to defer loans is addressed
Q: I heard from a colleague that I can no longer claim economic hardship to defer my loans. Please tell me this is not true.
The change is due to new legislation that created the "income-based repayment" (IBR) method. Generally, deferment under an IBR is tied to the federal poverty standard, and monthly loan payments cannot exceed 15 percent of the difference between the borrower's adjusted gross income and $16,245 (150 percent of the poverty level) for a family size of one in 2009. The monthly payment is adjusted each year based on the previous year's tax return. For married couples, both spouses' incomes are considered when calculating the IBR payment.
This program is new and somewhat cumbersome, so do your research and start consistent and persistent dialogue with your lenders. Remember, your lenders want your business and may be willing to negotiate terms.
Answers to our readers' questions were provided by Eric T. Seybert, CLU, North Star Resource Group, Minneapolis. He is a registered representative with CRI Securities LLC and Securian Financial Services Inc., members FINRA/SIPC, registered investment advisers. CRI Securities is affiliated with Securian Financial Services. Seybert does not provide specific tax or legal advice. Please consult a tax/legal professional for specific advice. Send your money management questions to firstname.lastname@example.org
. TR: 127910/DOFU: 12/09