Kansas State University

MANHATTAN — Whether you're struggling to pay off student loan debt or considering taking out your first loan for college, a Kansas State University financial counselor says there are many changes to federal loans you need to know about.

Individuals still trying to manage payments on their previous college loans now have another repayment option called the Pay As You Earn program. Jodi Kaus, director of the university's Powercat Financial Counseling, says this option adjusts the monthly repayment amount based on your discretionary income. But eligibility for this program is limited.

"The only borrowers who are eligible for this program are people who have no outstanding loan balances as of Oct. 1, 2007, and who also have a new direct loan obtained after Oct. 1, 2011," Kaus said. "It can be a better option than some of the other repayment plans, but it's a limited amount of borrowers who are going to be able to benefit. It's a good way to stay in good standing on your loan if you're in a high-debt, low-income situation and you want to make sure you're not ruining your credit by not paying the appropriate amount each month."

Other options are available for those who don't qualify for the Pay As You Earn program include income-based repayment, which adjusts the loan payment based on annual salary. While having a lower monthly payment may make it more manageable, plans involving smaller payments mean it will take longer to pay off the loan, ultimately accruing more interest. Kaus recommends getting back onto the standard repayment plan when it is affordable, unless you are eligible for a loan forgiveness program.

"What many students and recent graduates aren't aware of is there are loan forgiveness programs for federal loans," Kaus said. "One of these programs is the Public Service Loan Forgiveness. If you're working for a nonprofit or government agency and making loan payments on time for 10 years, at the end of the 10 years — which don't have to be consecutive — the remaining balance of your loan is forgiven."

Other forgiveness programs are geared for specific careers such as teaching or based on your location. Kansas offers the Rural Opportunity Zone Program, which pays up to $15,000 of an individual's student loan debt if her or she works in rural counties in the state.

Kaus said it's important to make some type of payment on your loans because it's a debt that cannot be removed from your credit or removed in bankruptcy. She also said having an idea of your future career and salary is important when considering student loans for college.

Loan calculators like those found at SALT, an online program that helps students manage their money and student loans, or the federal student aid site, https://studentaid.ed.gov/, can help you determine how much your monthly loan repayment would be depending on the amount you take out. But Kaus said to keep in mind that federal student loan details can change annually.

For instance, federal loans issued after July 2015 will have a higher interest rate because the loans are connected to the interest rate on 10-year treasury notes. That means changes in the market can increase the rate. Another change is that graduate students are no longer eligible for federal subsidized loans. Options are now limited to unsubsidized loans or graduate PLUS loans.

All these changes can be confusing, so Kaus warns to watch out for scams involving student loans.

"You shouldn't have to pay for any advice or services with your loans," Kaus said. "A lot of these scams are promising things that aren't available because the federal lenders have to abide by certain rules and regulations. There's really no way around those rules, so if someone's making promises that don't sound legitimate, it's not correct."

If you suspect a scam, contact the Consumer Financial Protection Bureau to find out if the company is legitimate, Kaus said and added that the best way to find out about federal loan changes is through your service provider or the government's federal student aid website.