Student Loan Relief

[rockvillemom]

<p>More details will be released later today</p>

<p>[Obama</a> to offer student loan relief - politics - White House - msnbc.com](<a href=“http://www.msnbc.msn.com/id/45039424/ns/politics-white_house/#.TqgUpGOkbtA]Obama”>http://www.msnbc.msn.com/id/45039424/ns/politics-white_house/#.TqgUpGOkbtA)</p>

<p>

Obama will use his executive authority to provide student loan relief in two ways.</p>

<p>First, he will accelerate a measure passed by Congress that reduces the maximum repayment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.

</p>

<p>

Second, he will allow borrowers who have loans from both the Family Education Loan Program and a direct loan from the government to consolidate them into one loan. The consolidated loan would be up to a half percentage point less. This could affect 5.8 million more borrowers.

</p>

<p>Thoughts? Is this going to be very helpful or just a drop in the bucket?</p>

[thumper1]

<p>One of my kids has an income low enough to benefit already. He chose not to do this because he does NOT want college loan debt hanging over his head for 20…or 25 years. </p>

<p>The other kid has loans in forebearance because she is in the Peace Corps. If I had to guess, I would think she will also choose to just pay her loans when the time comes.</p>

[juniebug]

<p>This would be relief for government loans, correct?</p>

[glido]

<p>It appears that there is aprovision to allow students to consolidate government backed private loans into government loans and lower the interest rate.</p>

<p>slowly, the Dept. of Ediucation is being transformed into a very large bank. College loans will go throughthe Dept. of Education bank. The taxpayers will subsidize these loans. Eventually, someone will say, “hey, we bailed out the Wall Street banks and the General Motors shareholders and the United Auto Workers, let’s bail out the college students!” Don’t hold your breath, however.</p>

[thumper1]

<p>My kids’ loans were all administered through the deparement of education anyway.</p>

[Medwell]

<p>Cool, more federal bureaucracy. Just what we need in education! As if they hadn’t raised prices and lowered quality enough already.</p>

[Erin_s_Dad]

<p>^ Hmmm. How much lower quality are your student loans?</p>

[romanigypsyeyes]

<p>I would assume this could only apply to federal loans, but I can’t tell. </p>

<p>Federal loans really don’t have THAT high of a limit (at least for undergrad). Are there truly that many people going into default on their loans when they have JUST federal loans?</p>

[Wolverine86]

<p>I’m curious to know what the definition of “discretionary” income is. Hopefully there won’t be loopholes allowing unscrupulous borrowers to “minimize” their monthly payments for 20 years then get the rest forgiven. It was this type of behavior which led to the changes in the bankruptcy laws regarding student loans several years ago.</p>

<p>Basic math still applies…if you don’t borrow more than you can reasonably afford to pay back, this “legislation” wouldn’t be necessary. Will everyone who borrowed within their means and paid back their loans on time get some sort of rebate? Or are they just catering to the irresponsible? Kinda makes you wonder…</p>

[leiqeltk]

<p>They say the average total amount of loans kids have is $24,000. I’ve heard it much higher - how did they do their calculations? Also, this sounds silly but how is discretionary income determined?</p>

[gloworm]

<p>I third the wanting to see an exact definition/description of “discretionary”.</p>

[swimcatsmom]

<p>

The bright spot for struggling graduates is that the monthly payments are based on any income above 150% of the poverty line. For a graduate living alone, the payments would be on 15% of any dollars made above $16,335, based on the 2011 poverty line.

</p>

<p>This is the current system. The proposed change would make it 10%.</p>

[sk8rmom]

<p>

It appears that there is aprovision to allow students to consolidate government backed private loans into government loans and lower the interest rate.

</p>

<p>Both FFEL and direct loans are Stafford loans - the only difference was which program the school chose to participate in. The government ended the FFEL program a year ago, so all new student loans are now direct loans. One can also consolidate Perkins loans, which were made by the school itself. </p>

<p>This just sounds like a change in percentages and forgiveness terms within the current IBR program. There are payment calculators and much more IBR info here:</p>

<p>[IBRinfo</a> :: Frequently Asked Questions](<a href=“http://www.ibrinfo.org/faq.vp.html]IBRinfo”>http://www.ibrinfo.org/faq.vp.html)</p>

[kelsmom]

<p>Are there truly that many people going into default on their loans when they have JUST federal loans?</p>

<hr>

<p>Sadly, yes.</p>

<p>This is only for federal loans (Stafford/Perkins).</p>