(You can eliminate the debt in 10 years if you work during that time in one of the many public service positions that qualify for forgiveness — provided the loan came through the government's direct lending program.)

One thing to be aware of: The faster you pay off loans the less you pay in interest over the life of the loan.

Some people don't like stretching out payments for 25 years. And if a borrower has a short-term setback, a deferment or forbearance that offers a temporary reprieve from payments could be a better alternative.

Michael Ryan, vice president with American Student Assistance, which counsels borrowers, says the income-based repayment plan is useful for people who now aren't in a position to pay student loans, "but also not very likely to be better off six months or a year from now."

To see if you qualify, contact your lender or loan servicer. Check out the Education Department's income-based repayment calculator at studentaid.ed.gov to see what your payments might be.

If you're already in default, you can still take advantage of income-based repayment.

The government offers an opportunity to rehabilitate defaulted loans. You will be given a new monthly payment based on your financial situation.

You must make at least 9 out of 10 payments to get back in good graces. If you can't afford this new payment, says Kantrowitz, of FinAid.org, negotiate for a lower sum.

Once loans are rehabilitated, you can apply for the income-based plan.

"Your monthly payment will be lower in most cases than the amount you were paying under wage garnishment," Kantrowitz says.

eileen.ambrose@baltsun.com

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