A new private company called SafeStart is offering a loan repayment option for in-debt students that may provide an alternative to the government’s new income-based repayment (IBR) program. SafeStart is marketed to borrowers at colleges, universities and online schools who are worried about whether they will be able to make their monthly loan repayments after graduation.
Students who pay into the program—a cost of around $40 – $60 for every thousand dollars of Stafford loans they take out—are covered in case they find themselves unable to make monthly payments during the first five years after graduating. They receive an interest-free line of credit which can be used to make up to 36 payments over a five-year period, provided the student meets the qualifications for financial hardship. College graduates are considered to be facing financial hardship if their monthly student loan payments exceed 10 percent of their income.
Money management training and debt counseling are also included in the program, which currently serves undergraduates only. Some financial aid experts are skeptical that SafeStart offers any significant advantages over government repayment programs, but it could be a viable option for some individuals, depending on their financial and career situations after they graduate.
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