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For many, student loan debt relief may be on the way

Two new government programs could save you some serious money and lower your monthly student loan payments.

The first new program is Income-Based Repayment: a new repayment option for federal student loans, which became available on July 1. It caps monthly payments at an affordable level based on your income and family size, and forgives any debt and interest that remains after 25 years.

That means if you're underpaid, underemployed, or just plain unemployed, your student loan payments won't break the bank. If you owe more on your federal student loans than you earn in a year, you probably qualify. The lower your income, the lower your monthly payment will be: in some cases, as low as $0. Income-Based Repayment covers almost all federal loans -- past, present, or future -- made by any lender, whether for college or graduate school.

The second program is called Public Service Loan Forgiveness. If you work in a government, nonprofit, or other public service job, you could have your remaining student loan debt forgiven after just 10 years of Income-Based Repayment, or certain other payments. Your loans have to be in the federal Direct Loan Program to qualify, but the 10 years don't have to be consecutive. You just need to make a total of 120 payments while working full-time for a public or nonprofit employer, starting on or after October 1, 2007.

These programs are only available to people with federal student loans. Private or "alternative" student loans, PLUS loans for parents, and consolidated loans that include PLUS loans are not eligible for these programs.

More information about Income-Based Repayment and Public Service Loan Forgiveness is available at