Results tagged “student loan” from EdLabor Journal

CNN highlights a report (PDF) by The Project on Student Debt that found "an increasing number of college students are turning to private loans -- one of the riskiest ways to pay for schooling." Additionally, "of those who borrowed privately, [they] did not take full advantage of what it called safer and more affordable federal loans."

Private loans are often riskier because they have variable interest rates and cannot be discharged via bankruptcy. Nor are they eligible for payment deferments, loan forgiveness programs or income-based repayment options, like those that began on July 1, 2009.

Americans need affordable, quality education opportunities to help make our economy strong and competitive again. President Obama has identified an opportunity to make historic investments in our economic future by improving early education opportunities and making college dramatically more affordable – and all at no cost to taxpayers.

The Student Aid and Fiscal Responsibility Act would do just that:

• Invests $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2011, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent.
• Strengthens the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses.
• Keeps interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012.
• Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy.
• Provides all federal student loan borrowers with upgraded, modern, state-of-the-art customer service. Rather than force private industry out of the system, the bill will forge a new public-private partnership that provides all borrowers with the highest-quality customer service when repaying their loans and maintains jobs. It will establish a competitive bidding process that allows the U.S. Department of Education to select lenders based on how well they serve borrowers, educate them financially, and prevent loan defaults. It will provide a role for non-profits to continue servicing student loans.

We encourage you to learn more about the Student Aid and Fiscal Responsibility Act, read CNN's article and The Project on Student Debt's report (PDF).

While highlighting some of the other benefits that started yesterday, both the Washington Post and the Daily Texan pay specific attention to the public service loan forgiveness program under the College Cost and Reduction and Access Act.

The Washington Post explains how this benefit works:

Under the Public Service Loan Forgiveness Program, the Obama administration announced yesterday [although this provision was enacted 2 years ago by Congress], people with student loans can have their debts erased after 10 years of public service. Let's say Dr. Feelgood graduates from medical school with a mountain of student loan debt. Her heart, and a little angel on one shoulder, tell her to work in a clinic serving a low-income community on tribal lands, but that little devil on her other shoulder says to become a plastic surgeon in Beverly Hills. And the little devil is holding her empty pocketbook as evidence to back his case.

If the doctor follows her heart and makes 120 payments -- one a month for 10 years -- on her student loan, Uncle Sam will tell her to forget the rest of the money she owes.

and the Daily Texan speaks to a student who will benefit from the new provision because she is entering public service.

Elisheba Evans, a former UT English student who transferred to the University of North Texas, is paying off her UT-Austin student loans.

She said the program’s forgiveness clause will benefit her in her career choice as a science teacher.

“It’s good that there is a system in place to reward people going into [public service] because you aren’t making that much at all,” Evans said.

Learn more about public service loan forgiveness (pdf) and read other blog posts on the benefits from the College Cost Reduction and Access Act.

Today new benefits go into effect that will make monthly student loan payments more manageable and affordable for millions of students and borrowers struggling to stay afloat in this tough economic climate.

These benefits were enacted as part of the College Cost Reduction and Access Act, a law I sponsored in 2007 that made historic investments to help more Americans earn a college degree. With the economy against this year’s college graduates, this relief couldn’t come at a better time.

Jonathan Glater has an article in today's New York Times about the good news for college students and graduates starting on July 1st. The new benefits include lower interest rates on federally student loans and an option to lower monthly payments based upon one's income (see video below).

“These benefits are guaranteed, no matter what happens in our economy, and are kicking in at exactly the right time for millions of Americans,” said Representative George Miller, Democrat of California and chairman of the House education committee.

See Chairman Miller's complete statement here.


Source: IBRinfo.org

Today's Bangor Daily News has an excellent editorial about the Obama administrations efforts to simply the FAFSA (Free Application for Federal Student Aid) form. Some changes will be immediate, while others will be phased in over the next several years. Rather than wait weeks, students will now be able to see estimates of Pell Grant and other student loan eligibility immediately. The number of questions will be reduced by about 20% to 150 and starting in January, for students who choose, they will be able to import relevant tax information from the IRS.

“Confusing paperwork shouldn’t stand between qualified students and a college degree,” said Rep. George Miller, a California Democrat who is chairman of the House Committee on Education and Labor. A law passed last year helped, creating a two-page form for some low-income families.

We encourage you to read the entire editorial and to learn from the Department of Education.

David Randall at Forbes.com has an article about the new Income-Based Repayment benefit that begins July 1st under the College Cost Reduction and Access Act. He explains how it will work:

First, income-based repayment will only be available for federal student loans that are in good standing. Under this plan, borrowers' monthly payments will be capped at 15% of the amount by which their income exceeds the federal poverty level (currently $16,245).

Let's say you have an adjusted gross income of $30,000. That means your pay exceeds the federal poverty level by $13,755 a year, or $1,146.25 a month. Under the new program, you would owe 15% of that amount, or $171.94, per month, regardless of your total outstanding loan balance.

If you left school owing $40,000 in federal loans, you would pay $460.32 a month under the standard 10-year plan. By choosing the income-based repayment plan, you would save 63% per month (by lengthening the life of the loan, however, you will end up paying more in interest over time.)

There are additional circumstances for married couples filing jointly, students in deferment, and medical students to consider. We encourage you to read the entire article (and use their cool income-based repayment calculator to see your potential monthly savings).

An op-ed by Gail Collins in today's New York Times discusses the need to reform student loans. After looking at the private loan sector, she then turns to the federally-guaranteed loans:

This is a system that goes something like this:

• We the taxpayers pay the banks to make loans to students.
• We the taxpayers then guarantee the loans so the banks won’t lose money if the students don’t pay.
• We the taxpayers then buy back the loans from the banks so they can make more loans to students, for which we will then pay them more rewards.

Are you with me so far? Wait, I see a hand waving back there. What’s that, sir? You want to know why the government doesn’t just lend the money out itself? Excellent question!

The White House estimates that it could save about $94 billion over 10 years if it cut out all the middlemen. And it has the basis of a system in place, since the Department of Education already makes a lot of direct loans to students.

We encourage you to learn more about the President's proposal, read the entire editorial and review the highlights from our recent hearing on this subject.

In today's Chicago Sun-Times, Terry Savage's Savage Truth column brings great news for recent college graduates.

Starting July 1, there will be new help for recent grads -- or those who have been out of school for a while and are struggling to repay student loans. The new federal Income-Based Repayment program will allow those with low incomes to pay as little as zero on their student loans, as long as they qualify based on income and amount of debt.

The rules are a little complicated, but you can visit www.IBRinfo.org. to use their online calculator to see if you are eligible.

Additional benefits that start on July 1 from the College Cost Reduction and Access Act include:

• increase in Pell Grants
• reduction in interest rates on federal loans from 6.0% to 5.6%
• TEACH grants for qualified undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
• Loan forgiveness after 10 years for public servants

We encourage you to read Ms. Savage's entire column and visiting our page on the College Cost Reduction and Access Act for more information.