Recent Obama Changes Favor Student Loan Borrowers
In an effort to provide relief to college students struggling to afford tuition and other expenses, the Obama administration has made changes to the way in which college students manage and pay back their student loans.
Many privately owned banks stopped providing student loans due to the financial crisis. The Obama administration stepped in to provide much-needed loans college students who wish to further their education.
These recent Obama changes favor student loan borrowers more than ever before. Now is a great time to consider financing a student loan. For current college students, now is an even better time to refinance existing student loan obligations.
Under the new law, private banks that acted as intermediaries to provide loans for college students will no longer receive money from the government. Previously, the big banks had collected billions in federal subsidizes meant to protect the banks from student loan default. The federal subsidies have ended and the federal government is now taking a major role in the management of student loans.
The government will use the nearly $60 billion worth of savings to expand Pell grants to the neediest of college students over the next 11 years. In addition, the Obama administration is investing $2 billion in community colleges over the next four years. Also, students who graduate with student loans will no longer face impossible or overwhelming payment schedules and terms.
The government hopes the changes will encourage more students to go to college by reducing the financial burden for needy students. America once graduated the most college students every year and these changes will help America do so once again.
Previously, banks allowed students with student loans to cap repayments at 15% of their income. But under the new legislation, the government will allow students who finance student loans to cap repayments at 10% of their income beginning in July of 2014.
Those who graduate college and continuing on to public service oriented careers, like teaching or nursing, will have their existing balances extinguished after 20 years of career service. Previously, the banks forgave their balances after 25 years.
Since these recent Obama changes favor student loan borrowers more than ever before, now is the time to finance a student loan. Because these changes are temporary, it is uncertain if the government will renew these changes in the future. The new legislation is a major defeat for the banking lobby because these recent Obama changes favor student loan borrowers more than ever before.Get a student loan and consolidate your debts. You can make one low payment with a loan consolidation.
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