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October 26, 2011 2:19 PM
Obama Proposes Changes to Student Loan Programs
President Obama today indicated significant changes to the way Americans make student loan payments. If these changes are enacted this could have a potentially dramatic impact on the role of student loan debt in many young professionals’ lives. According to the White House:
The Administration is moving forward with a new “Pay As You Earn” proposal that will reduce monthly payments for more than one and a half million current college students and borrowers. Starting in 2014, borrowers will be able to reduce their monthly student loan payments to 10 percent of their discretionary income. But President Obama realizes that many students need relief sooner than that. The new “Pay As You Earn” proposal will allow about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments. Additionally, starting this January an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates.
Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option. Students can find out if they are currently eligible for IBR at www.studentaid.ed.gov/ibr. Last year, the President proposed, and Congress enacted, a plan to further ease student loan debt payment by lowering the IBR loan payment to 10 percent of income, and the forgiveness timeline to 20 years. This change is set to go into effect for all new borrowers after 2014—mostly impacting future college students.
The White House says that these regulatory changes come at no additional cost to taxpayers.
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Joseph Reuben Harlan Sr. on February 06, 2012 8:24 PM:
I am a full blooded Omaha Native from Macy, Nebraska my address is 3598 O Avenue 68039 I have a student loan I have been paying for the past twenty years I pay 425 per month I have twevle children three are in college and three are serving a mission for the church of Jesus Christ of Latterday Saints I take care of my children. One of my sons has cancer he is in remission right now. He is also taking care of his six year old daughter by himself searching for employment he has a B.S. in Social Work and is unable to find employment I would like to know how I can have my loan forgiven thank you.