Obama has announced that he will be speeding up the new student loan plans that were set to take place in two years. The reduced loan rates for college students will start this January.
President Obama announced on Wednesday a plan to help out college graduates in paying back their student loan debt. The plan that he is announcing has already been passed into law, but has not yet taken effect. At the announcement today Obama will explain that They will be authorizing the student loan changes starting this January, which is two years before the cap was originally set to take effect.
The “pay as you earn” program will be authorized by Obama by executive order. Under the new program, college graduates will be able to consolidate multiple student loans into one, which can reduce their percentage rates, and all federal student loans will be forgiven after 20 years. This 20 year cap reduces the current time frame by five years. Most importantly however, is that the new policy will also allow graduates to base their monthly payments off of how much they earn. In fact, they will be allowed to cap their payments at ten percent of their discretionary income.
This new policy will go a long way with helping graduates keep their credit scores down, and keep their lives on track. Arne Duncan, the Education Secretary, said in a conference call on Tuesday “These are real savings that will help graduates get started in their careers. These changes could make a big difference in the lives of current college students and recent graduates as they enter one of toughest job markets in recent memory.”
This new policy could benefit as many as 1.6 million graduates in the United States. But even though many graduates qualify, many of them may choose not to participate in the new program. As of right now, only four hundred fifty thousand out of thirty six million graduates who qualify for the current federal pay as you earn program, where the income cap is fifteen percent, are actually enrolled in the program.
Officials have stated that the offering of the new student loan debt policies is in part a response to a petition that was signed electronically by over 30,000 people on a section of the White House’s website. In fact, this will be the first time that the White House has officially taken action due to petitioning.
The best part about this new program is that it will not even burden the tax payers. The administration will use the savings they will earn from getting rid of loan subsidies to cover the costs of the rest of the program like the reduced interest rates on the loans that are consolidated.
This new program will be a great help to our nation’s college graduates. Because of this bill, many college graduates will be able to get their credit scores back on track or help them to maintain their credit scores. Under current systems it can be difficult for students to maintain good credit, keeping them from applying for necessary loans such as mortgages and auto loans. You shouldn’t let your bad credit keep you from applying for a new auto loan though! There are many places willing to work with those who have bad credit to get the loans they need!
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