Crushing student loan debt is hammering college graduates. Student loan defaults are soaring toward new records. College loan borrowers have called for debt relief. But now President Obama has proposed faster government-backed loan consolidation and loan forgiveness plans to help borrowers repay their college debts and give a boost to the American economy.
President Obama's decision to enlarge schooling loan forgiveness to more students now could very well mean that loans you took out to pay for college may get much easier to handle. Details of his new "Pay As You Earn" program, outlining new rules for repayment, are still emerging.
student Loan Forgiveness - New Federal student Loan refund Plan Offers Debt Relief Hope
Loan consolidation at a lower interest rate is the main objective of the plan. Three major features of the plan benefiting college graduates struggling to make their monthly educational loan payments are:
Repayment Term
Each loan that would be consolidated retains its primary repayment term. Thus, borrowers will pay less interest over the life of the loan than they would under the primary consolidation programs.
Interest Rate
A fixed rate (not to exceed 8.25%) after applying the 0.25% interest rate allowance to qualifying loans being consolidated. Lower interest rates means more of the monthly payment pays off the valuable balance.
Electronic Debit payment Benefit
Those who take advantage of this new consolidation plan are eligible for an additional 0.25% interest rate allowance if their loan is repaid through the division of Education's automatic debit system.
The loan consolidation program will only be made ready during a 6-month window, Jan. 2012 through June 2012, so borrowers need to act fast.
The government wants those people retention both secret and government student loans to be allowed to integrate their debts right now into one new government loan. Such a move could slash their interest rates, and save them money in the process as the federal government speeds up roll-out of an income-based repayment program that was originally slated to begin in 2014.
