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Student Debt: Getting Your Payments to $0

I get emails all the time from college graduates, who are struggling with their student debt.
According to the Project on Student Debt, the average student graduates with $23,200 in loans. During normal times that college debt might not look so scary, but it's hard to start chipping away at that student debt if you face no job prospects.

Just this week a woman, who was out of work and panicked about paying her student loans, contacted me. My first question to her was this: Do you have federal student loans?

Borrowers are in far better shape if they owe on federal student loans. Here's the reason: the federal government launched a student debt repayment program in July, which is aimed at helping borrowers, who face high student debt compared to their income. I touched upon this student loan repayment program last week, but I wanted to devote more attention to this valuable tool.

You may qualify for the repayment plan if you owe on one of these federal loans:

Families which have taken out federal PLUS Loans for parents aren't eligible for the program, which is officially called the Income-Based Repayment Plan.

How do you know if you are eligible for this new student debt repayment program? It's easy. Just use the calculator at one of these sites:

Thanks to the student loan repayment program, the monthly obligation for unemployed student loan borrowers would drop to $0. A borrower living in a two-person household would owe a maximum of $102 a month if he or she earns $30,000 a year.

To apply for the student debt repayment program, borrowers need to contact their lender or lenders.

The Project on Student Debt estimates that 1 million Americans could be eligible for this program, but only a paltry number has signed up. Unfortunately, few student loan borrowers even know the program exists.

So if you know someone who is drowning in student loan debt, pass the word.

Lynn O'Shaughnessy is the author of The College Solution and you can also find her at TheCollegeSolutionBlog. Follow her on Twitter.

Student debt image by Jayel Aheram. CC 2.0.