Obama introduces new plan for student loan debt (costs, schools, graduates)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
WASHINGTON — President Barack Obama is outlining a plan Wednesday to allow millions of student loan recipients to lower their payments and consolidate their loans, in hopes of easing the burden of the No. 2 source of household debt.
First, he will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.
Second, he will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one loan. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million more borrowers.
Mixed feelings on this. I have $23,000 in loans. Interest rate is 6.8% (except $5500 at 5.6%). These are all FFELP loans (sallie mae and federal), so I assume they will all get 0.5% knocked off the interest. Intentionally went to state college to keep costs down.
on the other hand, not sure what they mean by "discretionary income". Seems ripe for abuse.
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
Last edited by GiantRutgersfan; 10-26-2011 at 09:13 AM..
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
Mixed feelings on this. I have $23,000 in loans. Interest rate is 6.8% (except $5500 at 5.6%). These are all FFELP loans (sallie mae and federal), so I assume they will all get 0.5% knocked off the interest. Intentionally went to state college to keep costs down.
on the other hand, not sure what they mean by "discretionary income". Seems ripe for abuse.
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
Awesome. So now the more responsible of us get to subsidize the less responsible. Again.
I don't think I could take advantage of this knowing the long-term implications (and half my monthly income goes toward paying back loans). I don't want the rest of the country paying for my recklessness.
on the other hand, not sure what they mean by "discretionary income". Seems ripe for abuse.
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
Quote:
Originally Posted by 43north87west
That's how I read it.
Discretionary income is defined as:
AGI - Poverty Line Income
So for a single individual:
$25,000 - $10,800 = $14,200
Thus, the individual would be paying $1,420 per a year. In 20 years, paying $18,400 towards the $100,000 loan.
I ignored a lot of things, such as deductions, interest, etc to keep it simple.
There has been legislation proposed to stop funding for-profits that do not produce "highly employable" people. I would like federal loans to be available to schools that produce graduates that can land jobs above a certain threshold.
Mixed feelings on this. I have $23,000 in loans. Interest rate is 6.8% (except $5500 at 5.6%). These are all FFELP loans (sallie mae and federal), so I assume they will all get 0.5% knocked off the interest. Intentionally went to state college to keep costs down.
on the other hand, not sure what they mean by "discretionary income". Seems ripe for abuse.
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
Fortunately the administration has been working on making for-profits accountable and trying to prevent them from ripping people off. Your concerns are still valid though and NJ's rough calculation gives an idea of how it would work.
Mixed feelings on this. I have $23,000 in loans. Interest rate is 6.8% (except $5500 at 5.6%). These are all FFELP loans (sallie mae and federal), so I assume they will all get 0.5% knocked off the interest. Intentionally went to state college to keep costs down.
on the other hand, not sure what they mean by "discretionary income". Seems ripe for abuse.
Can see someone taking out $100,000 in student loans to go to University of Phoenix and then getting a $25,000 a year job for the next 20 years because that is all who would hire them, and then only having like $5,000 a year in "discretionary income", thus paying only $500 a year, and $10,000 total over 20 years before the loan is forgiven...
It's unbelievable that someone would spend that much at the University of Phoenix much less any community college. Unless you're talking about the state college UP which is worth 4K a year at best.
It's unbelievable that someone would spend that much at the University of Phoenix much less any community college. Unless you're talking about the state college UP which is worth 4K a year at best.
The average for-profit student loan debt is 43k. That's AVERAGE. Plenty of people with 70/80k I'm sure.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Unless you're talking about the state college UP which is worth 4K a year at best.
