Expanded student loan forgiveness
Nikki Main, Staff Writer
Issue date: 3/4/10 Section: National
If Congress passes President Barack Obama's proposal to expand the College Cost Reduction and Access Act of 2007, college graduates will have remaining student debt forgiven in 20 years as opposed to 25 years and those who pursue a career in public service will have their debt forgiven in 10 years.
Obama's proposal seeks to increase the amount of student loans that are being paid off by decreasing the percentage of loans that are required to be paid. Borrowers of federal loans would have monthly payments capped at 10 percent of income rather than the current 15 percent under the 2007 act that went into effect in July of 2009, according to an article on latimes.com.
"Let's tell...one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years-and forgiven after 10 years if they choose a career in public service," Obama said.
Junior Matt Lance said he agrees with the idea of forgiving loans if working in public service but questions the idea of forgiveness on loans after 20 years for all.
"I feel that people will try and use the system to sweep away their loans," Lance said. "Someone can simply pay the interest of their student loan for 20 years and have the principle forgiven, which will leave the lender at a loss. With the inability to pay back home loans as one reason for the recent economic downturn, it is possible for another economic downturn in 20 years because of the loss money of banks and lenders."
Obama asked Congress to eliminate the federal system that provides subsidies to private student-loan companies that will save the government an estimated $87 billion over a 10 year period, according to politifact.com. This money will go to lowering student interest rates and increasing grants.
The point is to ensure students will have more opportunities to attend any college they want and not worry about not being able to escape the debt that plagues many college graduates.
Obama's proposal seeks to increase the amount of student loans that are being paid off by decreasing the percentage of loans that are required to be paid. Borrowers of federal loans would have monthly payments capped at 10 percent of income rather than the current 15 percent under the 2007 act that went into effect in July of 2009, according to an article on latimes.com.
"Let's tell...one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years-and forgiven after 10 years if they choose a career in public service," Obama said.
Junior Matt Lance said he agrees with the idea of forgiving loans if working in public service but questions the idea of forgiveness on loans after 20 years for all.
"I feel that people will try and use the system to sweep away their loans," Lance said. "Someone can simply pay the interest of their student loan for 20 years and have the principle forgiven, which will leave the lender at a loss. With the inability to pay back home loans as one reason for the recent economic downturn, it is possible for another economic downturn in 20 years because of the loss money of banks and lenders."
Obama asked Congress to eliminate the federal system that provides subsidies to private student-loan companies that will save the government an estimated $87 billion over a 10 year period, according to politifact.com. This money will go to lowering student interest rates and increasing grants.
The point is to ensure students will have more opportunities to attend any college they want and not worry about not being able to escape the debt that plagues many college graduates.
Viewing Comments 1 - 3 of 4
Julia
posted 3/04/10 @ 11:12 AM EST
I strongly feel that if billions can be given to Welfare & Section-8 recipients, some of which we all know are just free-loading on the system, then why not forgive the loans or at least 50%. (Continued…)
collegeloanconsultant
posted 3/04/10 @ 7:07 PM EST
The monthly payment formula that allows loan forgiveness after 25 (or 20) years also requires that only those borrowers who make each consecutive monthly payment, will qualify. (Continued…)
Loan Section
posted 3/08/10 @ 4:43 AM EST
A great post. Thank you for sharing about it.
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