Posted In: Educator Voices, Educators, Future Educators, Michigan
By Mary Ellen Flannery
Lucas and Andra Schrauben love their jobs! New teachers, Lucas in his first year and Andra in her second, they both work in Michigan, where they also hope to buy a house and soon start a family.
The only thing holding them back is the enormous amount of student debt that Andra, in particular, incurred in paying for their college degrees. Together, they owe more than $150,000.
“I always got good grades, always worked hard, always saved, and now I’ve got a great job—but I can barely afford it,” said Lucas Schrauben. “I’ve got this idea of the American Dream and I’m still going to realize it, but it might be a sliver of it or it just might take longer to get there.”
One bright spot is Lucas Schrauben’s eligibility for new federal repayment programs, such as the income-based Pay As You Earn program, which last week the U.S. Department of Education issued final rules for. Other repayment programs, also introduced by the Obama administration during recent years, include the Public Service Loan Forgiveness program and the more specific Teacher Loan Forgiveness Program.
The way these works is:
- To be eligible for Pay As You Earn, you must have taken out a your first federal loan after Sept. 30, 2007, and you also must have received a loan after Sept. 30, 2011. (The plan is intended to help recent graduates mostly.) You must also owe more than 10 percent of your discretionary income. Payments will be capped at 10 percent (lower than other repayment plans).
- The original Income Based Repayment (IBR) plan, also for federal loan holders, is slightly different. Your monthly payments will never be more than 15 percent of your income.
- Borrowers in IBR plans will have their loans forgiven after 25 years of payments, but some teachers and other public-service workers can end their misery sooner! Public-service workers can stop payments after 10 years, if they were employed in public service during those ten years. If you’re a teacher in a Title 1 school, check out the Teacher Loan Forgiveness Program specifically. It promises to forgive up to $17,500 of federal loan debt after five years. (For more information about all of these programs, visit studentaid.ed.gov.)
Lucas Schrauben is fortunate he borrowed from the federal government, as opposed to private lenders. Because of that, he was able to consolidate his loans and enter IBR. In doing so, his monthly payments were tied to a certain percentage of his income, and consequently dropped from $400 to $200 a month. (And yes, the extra $200 does make a difference to this young couple.)
His wife, unfortunately, who owes a much greater amount, borrowed mostly from private lenders. Basically, “she works to pay for gas—and her loans,” said Lucas Schrauben.
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