As an increasing number of individuals the United States have a problem with managing student loan repayment, the US Department of Education has announced an agenda to make payments more affordable. The ‘Pay While you Earn’ repayment plan will allow those under the weight of student education loans to repay at a rate that is capped according to their income.
Borrowers who qualify may have their payments capped at 10% of their discretionary income, with the Department estimating that 1.Six million borrowers could reduce their payments if they qualify.
Income-based repayment, that allows borrowers to pay for 15% of their discretionary income, has already been used by ~1.3 million. Those who do not qualify for ‘Pay As You Earn’ still may qualify for income-based repayment.
According to the Department, the move will especially help those in public sector employment.
Most borrowers are able to repay their student education loans, but for many who are struggling C including teachers, nurses, first-responders and others in lower-paying public service careers C these income-driven plans could reduce monthly payments to help make sure that borrowers can manage their debt and avoid the negative consequences of defaulting on their student loans.
The Department admits that these repayment plans will result in borrowers paying more interest, but lowering the burden of repayment, especially in the first years after college, will provide an overall benefit and safeguard against defaults.
With a growing number of options for repayment, the Department of Education has established a suite of tools to help compare repayment options and choose the one that best fits an individual’s circumstances. The tools are available at?StudentLoans.gov.
More general information on the responsibilities that include government student education loans and information on managing finances is available at StudentAid.gov.
Easing the burden on student borrowers would be a pledge made by President Barack Obama and Secretary of Education Arne Duncan throughout Obama’s first term. With questions over student loan interest rates, grants, and also the overall future of federal financial aid for advanced schooling, policies governing student loans developed slowly. Income-based repayment and ‘Pay As You Earn’ are small steps toward the President’s stated commitment of creating higher education more affordable.
\”We know many recent graduates are worried about repaying their student loans as our economy continues to recover, and today it\’s easier than ever for student borrowers to reduce monthly payments and remain on track,\” said U.S. Secretary of Education Arne Duncan.
In recent times, student loan debt in the usa has eclipsed the $1 trillion mark, as well as overtaking credit debt. The average debt burden carried by a graduate of a 4-year school is ~$26,000.