AppId is over the quota
Today, President Obama spoke in Denver, presenting his plan for managing student loan debt in the US. As student loan debt climbs toward the Trillion dollar mark, students and graduates are calling for change nationwide, and today’s presidential speech addressed this heightening issue.
According to the White House, the President’s plan is twofold:
First, he intends to cap the student loan minimum monthly payment at 10 percent of discretionary income, lowering it from the current 15 percent. This plan was originally set to go into effect in 2014, however, President Obama is moving this initiative to 2012.
For students and grads, this can have a huge impact, potentially saving borrowers hundreds of dollars each month. The hope is that students will be less likely to default on loans, and be able to get their lives back in order with more money in their pockets each month.
The second part of this debt reduction plan is to allow consolidation of FFEL and Direct loans together. For those who aren’t familiar with FFEL, here’s a quick summary:
The FFEL program was a federal student loan program where banks and lenders acted as the intermediary, servicing a student’s government loan. Today, the Direct Loan Program eliminates the intermediary, and the loans are disbursed directly through the government.
Currently, students who have both an FFEL and Direct loans are unable to combine them into one loan. The new consolidation option could impact how much borrowers pay in interest, as consolidating these loans may lower the interest rates for many borrowers nationwide.
But wait there’s more…
Not only did Obama propose these two initiatives to lower debt, but he intends to lower the number of years before a borrower can be eligible for loan forgiveness, cutting the length of repayment from 25 to 20 years. This means that after 20 years of on-time repayment, a borrower could apply to have their remaining debt forgiven.
What do you think? Does this sound like a solid plan?
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