Programs to repay student loans target unemployed grads
USA Today, via Yellowbrix
August 28, 2009
•Bellevue University, a private university in Nebraska that primarily enrolls adult students, says students who are laid off can have tuition, fees and loan obligations deferred for up to six months.
The program is designed to prevent laid-off students from dropping out or taking on more debt, says Scott Klene, senior director of student financial services.
•A new government program allows borrowers with federal student loans to sign up for a repayment plan that caps payments based on their income. About 8,700 borrowers who have loans through the federal Direct Loan program have applied since the program’s July 1 launch, the Department of Education says.
Most borrowers who qualify for the program won’t have to spend more than 10% of their income on loan payments. Borrowers whose income falls below 150% of the poverty level won’t have to make any payments, says Lauren Asher, acting president of the Project on Student Debt.
The latest Education Department figures estimate that student loan default rates rose to 6.9% for fiscal 2007, from 5.2% a year earlier. The consequences of default are severe: The loan balance becomes due, and the government can garnish the borrower’s wages and withhold tax refunds.