DID YOU KNOW NEW GOVERNMENT LEGISLATION WILL MAKE MORE MONEY AVAILABLE FOR STUDENT LOANS?

 

 

    A new law passed this week that will have far reaching and dynamic effects in how most people in the United States pay for a university or college education. In the past, both the federal government and private banks worked together to allocate student loans, but the loan rates and repayment schedules were determined by the loan processing banks. In recent years, many banks raised the interest rates on student loans and shortened the allotted time for repayment of the loans, thus making a university education impossible to access for many would-be students. Here is a brief list of the changes from the new federal law:

 

1. Shifts Responsibility- The federal government will end the subsidies previously given to private banks and assume responsibility for issuing cut-rate student loans.
   

    

2. More Loan Money- The government operated student loan program would be less costly, thus freeing much more money that was previously given as bank subsidies to be available for student loans.
   

    

3. Lessens Government Spending- It is estimated that the federal government will save at least $61 billion dollars over the next ten years by governing student loans and eliminating bank subsidies.

    

4. Lowers Monthly Payment Caps- The previous cap for student loan repayment was set by banks at 15% of monthly income, and that has now been lowered to 10%, thus making repayment of student loans easier over time.

    

5. Changes Debt Cancellation Time- The previous student loan system allowed for loan balances to be forgiven after 25 years. The new law would allow for student loan debt forgiveness to occur after 20 years.

    

6. Lower Rates- The federal government promised to lower the interest rates on student loans so more opportunities would be available for low-income and minority people to access a university education.

    

Continued Tax Benefits For Being A Student- There were many tax credits and benefits for students that went into effect in 2009, and those will be continued in the future. It is hoped that the tax benefits, combined with the lower interest rates on student loans, will encourage more people to seek a university education and re-education in fields currently needed in the employment sector.

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