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Posted: 1:14 p.m. Wednesday, Dec. 15, 2010

New federal law offers lower student loan monthly payments, debt forgiveness

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My friend Michelle Singletary, who writes a nationally syndicatedpersonal finance column, recently tackled the top of student loan debt in some very strong wording.  

"For years, I've written, talked and generally fussed about the way people handle their money," she wrote in The Washington Post. "Yet it never - and I mean never - ceases to amaze me how people borrow money with so little understanding about how much they owe and how long it will take to pay it back. And the worst are borrowers who take out loans for college."

I have a simple rule about student loan debt that has made some people unhappy, both in the academic world and outside of it. My rule is never take on more debt for a degree than the likely first year earnings you expect to get from having that degree.

Critics say that's my rule uses a sledgehammer when you really need a scalpel; that's just the nature of my personality. But I like the rule because it sets a parameter of borrowing that, over time, you can actually work off.

If you need help repaying federal student loans, there's a website called that can help you understand new laws about what's called an income-based repayment plan. This site will tell you, in plain and simple English, how to use the new law to reduce your monthly payments based on your income and family size. will also explain how to get loan forgiveness under various conditions. That last point has caught a lot of people's attention. See my related links below this story for further details on loan forgiveness.

One thing that's not covered at all under the new law is private student loans. They are poison for your wallet. Never, ever take out private student loans -- unless you want to give yourself a financial disease you can't get rid of ever.

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