Students, you can issue a minor sigh of relief (emphasis on ‘minor’). The White House is thinking about your student debt, and President Obama, bypassing Congress, is set to announce a plan today that allows for students to lower payments and consolidate their student loans.
It’s a fairly specific new plan for people who hold the two types of loans, but according to the Wall Street Journal, this means that 5.8 million Americans with both direct government student loans and government-backed private loans can now consolidate their debts into one government loan. Woo!!!! Wait. What does that mean?
Well, for the 5.8 million who this applies to, the new plan makes it so borrowers will wind up receiving a reduction of up to 0.5% in their interest rates since the private loan would be refinanced at the lower government rate.
Still, some question, as with any political move, is it just another step to secure young voters for the 2012 election? Maybe it is. But isn’t everything done for that reason? Or maybe it’s not. Either way, student loan debt is foreseen to be the next “bubble” to burst and a common concern among Occupy Wall Street protesters. At least someone is addressing this ginormous mutated pink elephant in the room.
With the nature of the current economy, many college-bound students are wondering if going into debt for a college education is even worth it with prices skyrocketing. Nobody, not even someone with a college degree can be assured a job. And with student loan debt second behind mortgages and actually ahead of credit card debt, students are fearful of taking on such debt without being certain they can repay it. It’s a huge, looming problem.
Along with the loan consolidation plans, Obama plans to accelerate a program to cap repayments. Currently, the rule on payment limits is that graduates can pay only up to 15% of their income with all debt forgiven after 25 years of payments. The rule Obama wants to put into place would lower the cap to 10% of a graduate’s income and loans would be forgiven after 20 years. Not too shabby…but, still, student debt is way too high for a nation with this much unemployment.
What can you do to lower your student debt before you’re already 15 feet in it? Scholarships. Apply for some.
Does student debt concern you? Does Obama’s plan sound good to you? Leave a comment about it below.