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Trick or Treat: President Obama's Plan for Cutting Federal Student Loan Payments
Yesterday, President Obama revealed his plan for cutting student loan payments to students at the University of Colorado -- Denver.
By Mark Kantrowitz, Publisher of Fastweb and FinAid
Income-based Repayment
Who: 1.6 million borrowers since 2008 with at least one loan in 2012 or later, generally borrowers whose total federal student loans exceeds their annual income
What: Reduces cap on monthly loan payments by a third, from 15% of discretionary income to 10%, and forgives the remaining debt in 20 years instead of 25
When: Starts in 2012 instead of waiting until 2014
Who Doesn’t Benefit: 36 million borrowers already in repayment, such as recent and older college graduates
Consolidation of Split Borrowers
Who: 5.8 million “split” borrowers who have loans in both the federally-guaranteed and direct student loan programs
What: Provides an interest rate reduction for split borrowers who transfer their federally-guaranteed student loans into the Direct Loan program by consolidating them
How: 0.25% interest rate reduction on the transferred federally-guaranteed student loans, plus a 0.25% interest rate reduction on all federal loans in the direct loan program for repaying the loans through auto-debit
When: Borrowers will be contacted by their services in early 2012 and must consolidate by June 30, 2012
Who Doesn’t Benefit: Borrowers who are already in the Direct Loan program, non-split borrowers who have only federally-guaranteed loans and borrowers who are in default on their federal student loans
Caveat: Borrowers who intend to accelerate repayment of their highest interest rate federal student loans might be better off keeping the loans separate instead of consolidating
pihugaga
5 months ago
18 comments
Levi. I just agree... William`s bl0g is great... last monday I bought themselves a Car after having earned $5278 this - 5 weeks past and-over, ten grand lass-month. without a doubt it is the most-comfortable work Ive ever had. I actually started 5 months ago and pretty much immediately was making more than $74 p/h. , http://www.Cloud65.com
lizloansbest
9 months ago
2 comments
Well, just pray that Pres. Obama give the best solution to prevent the increasing issue on student loaning. If the issue would be solved in a much faster way then all of us will gain benefits from it. Obama has a lot of capacity to make things better not by making them worst. - Liz, http://lizloans.com
tamicilk
about 1 year ago
2 comments
Requiring accountability from schools - especially private schools that charge obscene rates - is just plain common sense. Why shouldn't a school be required to prove their graduates are earning enough first year out to pay back the school loan?
theresahowe63
over 1 year ago
4 comments
The thing is i dont understand is, how can you go in debt with student loans when borrowing is suppose to help you gain credit not put you in debt. Yet, on the other hand you don't qualify for any other loans to cover your personal finances even if you are employed. The loan officers look at you like your borrowing from their own personal cookie jar .
theresahowe63
over 1 year ago
4 comments
Borrowers should be able to make a payment to their student loans before taxes are taken. Located on your w2 forms you can check the box that say, would you like to have any extra money taken out of your pay. These payment should be allowed to be applied to your federal student loans. By withholding a higher amount from their pay this allows payments to be made faster and more convient .
naim123
over 1 year ago
2 comments
The President and Congress need to come up with real plans that will help college grads get jobs. Cutting the Federal Student Loan is not enough when you can not get a job. The real solutions to help create job growth in this country is Tax Reform, Trade Reform, and Financial Reform. These reforms will make a big difference in this current job market. The reason why the reforms are not being mention in the debates is because our government is brought and that keeps them from focusing on the real solutions that will help being back prosperity to this country.
SMILEANYWAY
over 1 year ago
8 comments
IT THE SCHOOLS. YOU NEVER KNOW WHO ACTUALLY WORKS THERE. ARE THEY THERE FOR A MONTH OR TWO AND THEN QUIT. YOU JUST KNOW HOW EQUIPPED AND TRAINED THESE PEOPLE ARE. COLLEGE IS A BIG DEAL AND YOU ALMOST NEED A DEGREE TO GET ANY KIND OF JOB.
Ramirez
over 1 year ago
8 comments
Blaming who? The system was instituted long time ago and with it its corruption. Who get into now is just paying the price of old debts.
WildRose
over 1 year ago
2 comments
This does not help the people who are in the deepest; we grads in repayment. I never would've went to college if I'd known I'd still be working 2 retail jobs to pay for it.
joshc31
over 1 year ago
4 comments
get ready because as soon as his term is over this country might be sold off and we will have towork in the ditches to pay off the debts of our ancestors
joshc31
over 1 year ago
4 comments
My problem is that another company bought most of my loans and they are very rude not understanding why I don't have a job to pay them back over 30thou. The funny (well not so funny) thing is they tried to make me pay that in full. Are they serious how am I supposed to just come up with 30thou I don't even have a job yet. When I spoke to them about my situation the guy was very rude like what are you just lazy why don't u have a job. I really hate people like that. I have been looking. But anyway no it's not the federal loans that are the problem in fact Educational Direct has redused my payments to $0.00 to help me go back to college. The only problem with that is I have to pay back that other company before I can even think of returning to college.
LegalDiva2
over 1 year ago
2 comments
AttboyMr.President, just loving all the mess you are cleaning up from REPUB.CANS
siberian
over 1 year ago
2 comments
I can not find a job since I graduated. Unable to pay back my loans to SallieMae.Would be fair if students can file chapter 7 on student loans, just like big companies and rich people.
bdwanke
over 1 year ago
2 comments
The government getting this involved with education loans with only serve to drive the price of college up even further. this is what happened with the housing market; Government underwriting loans like there is no tomorrow causing a bubble which bursts and took the whole economy down with it. This education bubble burst won't be as bad as that but it will certainly make things worse than today. What needs to happen is the cost of highere education needs to come down. Colleges are over charging their students, and they raise prices saying "The operations costs keep going up" when the hikes are zooming skyward much faster than inflation. Something has to give.
whiteash2003
over 1 year ago
2 comments
I just want to Go for my Masters in 2012, and guess what, my University Financial Aid has announced in its website that no more subsidized student Loan will be provided to Grad students, only UnSub. That's not Fair , I'm wondering it it's changing only for my school or it's a Federal change , but that's not Fair to penalize students for continuing their education