Obama Unveils Plan to Ease Burden of Student Loans

Not quite the forgiveness of student loans that the petition floating around the web is calling for, but some relief may be ahead.

 

Highlights.

  • Under the plan, Americans would be able to consolidate and reduce interest rates on their student loans.
  • The start of a program approved by Congress that caps monthly student-loan payments for borrowers with low incomes will be moved from 2014 to 2012.
  • The centerpiece of the plan would allow the estimated 5.8 million people who hold both direct government student loans and government-backed private loans to consolidate their debts into one government loan.
  • Speaking to a largely student crowd at the University of Colorado Denver, Mr. Obama said neither he nor his wife, Michelle, grew up with much money, and when they finished law school, they had about $120,000 in combined student debt.
  • Repayment would be capped. Currently, rules allow graduates to limit payments to 15% of their income, with all debt forgiven after 25 years of payments. Congress has changed the program to allow borrowers in 2014 to pay 10% of income, with loans forgiven after 20 years. Under the changes, the program will start next year, not 2014.
I’m going to wait until this goes in effect first before I pop the celebratory bottle of Apple Cider.

2 comments

  1. Cynthia says:

    it sounds like a good idea, for those that aren’t making good money. for those that have income-contingent repayment plans, its golden. for the rest of us, who already have very low interest rates circa the consolidation option of 2005, and good paying jobs, it means we’re stuck paying off the loans until they’re done. unless like occupy wall street suggests, wipe the slate clean.

    • Lola Banjo says:

      You’re right… This is what I need clarification on. No specific income guidelines have been mentioned yet, so it’s hard to tell who exactly will qualify..

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