President Obama’s plan to help the economy and create jobs
‘We can’t wait’ to ease the burden on college students, President says
by Pinedale Online!
October 30, 2011
On October 25th, through the latest of ongoing weekly "We Can’t Wait" Executive Orders by President Obama bypassing Congressional decision-making authority, a new program has been put in place purportedly to help ease the burden on students for the cost of their expensive college education, help create jobs, and strengthen the economy. Under this plan, student’s payments on their federal college loans will be capped to 10% of their discretionary income and after 20 years of payments, the balance of their school loan debt will be forgiven.
The new program is expected to be available to more than 1-1/2 million college students and borrowers. An estimated 6 million more students will be able to refinance their current student loans into the fold of the federal student loan system to consolidate their loans and reduce their interest rates.
"These changes carry no additional cost to taxpayers," the White House stated.
Institutions of higher education would be paid up front for the cost of the students’ education by taxpayer-funded federal loans.
Once the student gets into the workforce, low wage earners may never repay a significant portion of their loan debt before the 20-year forgiveness time period is reached. High wage earners with large school debt, such as for medical school, still may not completely pay off their entire school debt by the time the 20-year limit kicks in because of the 10% limit on the monthly repayment charge.
Taxpayers will pay for the cost up-front to issue the loans, as well as absorb the loss of the defaults on the back-end of the program. Much of the financial loss impacts on taxpayers due to defaults or unrecovered loan balance payments won’t be felt until twenty years from the time the loan was taken out by the student.
Click on this link to read more about the new program: We Can't Wait: Obama Administration to Lower Student Loan Payments for Millions of Borrowers