The new student loan laws from the Obama Administration have many asking what they will change and how they are going to help college students. While college loans are not uncommon, many people spend decades paying off student loans, due to interest rates, but the new laws are set to make student loans more affordable.
First, federal student loans are going to come directly from the government, rather than go through a lender. This is going to bring lower interest rates and since federal loans were a federal program anyway, this change simply cuts out the middleman, which should save money.
There will also be additional Pell Grant money available and more Pell Grants offered to students when these laws come into effect, which is beneficial to low-income students.
Also, there is a change in student loan forgiveness procedures that may benefit those with federal student loans. Anyone with federal student loans, that consolidates their loan and qualifies for an income-based repayment plan, may also qualify for a forgiveness option. This income-based repayment option is capped at 10% of one’s income, which is down from 15%.
Those in the public service field can have their student loans forgiven after 10 years of payments and those in non-public service field can have their loans forgiven after 20 years, which is down from 25.
While these laws are not set to go into effect for a few years, there is still student loan assistance to anyone struggling. Counselors often recommend talking with one’s lender to find out options specific to their student loan situation.