President Obama has proposed two initiatives to help those strapped with college loan debt.
One of Obama's proposals would advance the start date for a special loan repayment program based on income that aims to help struggling graduates.
The way the Income-Based Repayment Plan works now is that graduates who enroll get charged 15% of their monthly discretionary income to pay off loans, with debt forgiven after 25 years.
Congress passed a law set to go into effect in 2014 that would drop the monthly payment for loans originated that year to 10% of discretionary income and would forgive all debt after 20 years.
The administration would improve on the law by fast-forwarding the new terms to take effect in 2012 on loans originated that year, White House domestic policy adviser Melody Barnes noted Tuesday.
So far, about 450,000 students are enrolled in the income-based repayment plan, but hundreds of thousands more are eligible.
The other proposal would encourage graduates with two or more kinds of federal loans to consolidate their loans, giving them a small interest rate break of 0.5% [ SOURCE ]
4 comments:
Finally, an answer to all the students' prayers. In these economic times, all parents and students wish for is to lessen their burden in paying these loans.
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I think President Obama's proposal to help those people facing college loan debt is really commendable. Advancing the start date for the loan payment that would be based on the student's income will surely help students.
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As a product of student loans, I am glad the president has taken the initiative to help the students pay their debts. However, I have also read that this new bill is not news at all. Most of the policies are lifted from an existing policy related to student loans.
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