CCC Student Loan Counseling & Education Debt 2 — Questions and Answers
Question 1: Under the Public Service Loan Forgiveness (PSLF) program, how many qualifying payments must a borrower make before their remaining balance is forgiven?
- 60 payments
- 100 payments
- 120 payments (Correct answer)
- 240 payments
Correct answer: 120 payments
PSLF requires 120 qualifying monthly payments (equivalent to 10 years) while working full-time for a qualifying employer before forgiveness is granted.
Question 2: Which income-driven repayment plan, available only to borrowers who are new borrowers as of October 1, 2007 with new loans as of October 1, 2011, caps payments at 10% of discretionary income?
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE) (Correct answer)
- Revised Pay As You Earn (REPAYE/SAVE)
- Income-Contingent Repayment (ICR)
Correct answer: Pay As You Earn (PAYE)
Pay As You Earn (PAYE) caps payments at 10% of discretionary income and requires borrowers to be new borrowers meeting specific eligibility criteria.
Question 3: For new IBR borrowers who first borrowed on or after July 1, 2014, what percentage of discretionary income is the monthly payment capped at?
- 5%
- 10% (Correct answer)
- 15%
- 20%
Correct answer: 10%
New IBR borrowers (first loan on or after July 1, 2014) have payments capped at 10% of discretionary income, compared to 15% for older IBR borrowers.
Question 4: How is 'discretionary income' defined for purposes of federal income-driven repayment plan calculations?
- Total gross income minus all federal and state income taxes paid
- Adjusted gross income minus 100% of the federal poverty guideline for the borrower's family size
- Adjusted gross income minus 150% of the federal poverty guideline for the borrower's family size and state (Correct answer)
- Net take-home pay after all payroll deductions
Correct answer: Adjusted gross income minus 150% of the federal poverty guideline for the borrower's family size and state
For most IDR plans, discretionary income is defined as the borrower's AGI minus 150% of the federal poverty guideline for their family size and state of residence.
Question 5: A borrower with only Parent PLUS Loans wishes to enroll in an income-driven repayment plan. What must they do first?
- Apply directly for Income-Based Repayment (IBR)
- Apply directly for Pay As You Earn (PAYE)
- Consolidate the Parent PLUS Loans into a Direct Consolidation Loan to access Income-Contingent Repayment (ICR) (Correct answer)
- Request a PLUS Loan income-driven adjustment through their servicer
Correct answer: Consolidate the Parent PLUS Loans into a Direct Consolidation Loan to access Income-Contingent Repayment (ICR)
Parent PLUS Loans are excluded from most IDR plans; however, if consolidated into a Direct Consolidation Loan, the resulting loan becomes eligible for Income-Contingent Repayment (ICR).
Question 6: The Teacher Loan Forgiveness program can forgive up to what maximum amount in Direct or FFEL loans after five years of teaching in a qualifying low-income school?
- $5,000
- $17,500 (Correct answer)
- $25,000
- $50,000
Correct answer: $17,500
Eligible teachers can receive up to $17,500 in Teacher Loan Forgiveness, with highly qualified math, science, or special education teachers qualifying for the full amount.
Question 7: Under the SAVE plan (formerly REPAYE), after how many years are remaining balances forgiven for borrowers who originally borrowed only for undergraduate studies?
- 10 years
- 15 years
- 20 years (Correct answer)
- 25 years
Correct answer: 20 years
Under the SAVE plan, borrowers with only undergraduate loans receive forgiveness after 20 years, while those with any graduate loan debt receive forgiveness after 25 years.
CCC Student Loan Counseling & Education Debt 2
Under the Public Service Loan Forgiveness (PSLF) program, how many qualifying payments must a borrower make before their remaining balance is forgiven?