Program Could Reduce Student Loan Payments, Interest Rates

Abstract

You have accessThe ASHA LeaderPolicy Analysis1 Nov 2011Program Could Reduce Student Loan Payments, Interest Rates Neil Snyder Neil Snyder Google Scholar More articles by this author https://doi.org/10.1044/leader.PA4.16152011.30 SectionsAbout ToolsAdd to favorites ShareFacebookTwitterLinked In Changes to federal student loan programs announced in October are designed to lower interest rates, cap monthly student loan payments, or both, for eligible borrowers beginning in 2012. Eligibility for these new programs is complicated, based on the borrower’s income, family size, and other factors. The overall loan debt for eligible borrowers may not be reduced (because smaller monthly payments may translate into a longer loan repayment period and thus more interest on the loan). The proposed changes affect borrowers with federal direct loans only, not private loans. Borrowers are strongly encouraged to check with their lenders or refer to information posted at the Department of Education’s student aid webpage. Individuals who borrow in 2012 or later (future students) are eligible to enroll. In addition, individuals who borrowed after 2008 AND in 2012 (current students) are eligible. Under the new 10% repayment cap (formerly 15%), loan repayments for low-income borrowers may not exceed 10% of the borrowers’ gross annual income. Borrowers should consult the Department of Education’s website to determine how to calculate their annual income and eligibility for the cap. Low-income borrowers who are not current or future students may still qualify for the 15% cap on payments. Low-income graduate students, who tend to have higher student loan debt compared to undergraduates, may benefit by enrolling in the Public Service Loan Forgiveness Program. Enrollees who make 120 consecutive loan payments, work in a public service setting for 10 years, and still have a loan balance may apply for forgiveness of that balance. Only federal direct loans recipients are eligible for this program. The 120 payment/10-year clock starts with the borrower’s first payment or with payments made after July 1, 2008, whichever came first. Borrowers of Federal Family Education Loans (non-direct loans from a bank or Sallie Mae) will be eligible to consolidate those loans into the Direct Loan program and receive a 0.5% interest rate reduction. President Barack Obama made the changes in advance of similar changes scheduled to take effect in 2014, and the administration claims that more than 1.5 million current college students and borrowers will see their monthly student loan payments fall. Resources U.S. Department of Education, Student Aid on the Web, Income-Based Repayment Plan “We Can’t Wait: Obama Administration to Lower Student Loan Payments for Millions of Borrowers” (White House press release) “Obama’s Student-Loan Order Saves the Average Grad Less Than $10 a Month,” by Daniel Indiviglio for The Atlantic Author Notes Neil Snyder, director of federal advocacy, can be reached at 800-498-2071, ext. 5614, or[email protected]. Advertising Disclaimer | Advertise With Us Advertising Disclaimer | Advertise With Us Additional Resources FiguresSourcesRelatedDetails Volume 16Issue 15November 2011 Get Permissions Add to your Mendeley library History Published in print: Nov 1, 2011 Metrics Downloaded 80 times Topicsleader_do_tagleader-topicsasha-article-typesCopyright & Permissions© 2011 American Speech-Language-Hearing AssociationLoading ...