Since I have my mountains of student debt to start dealing with, I always pay attention to what’s going on government wise with student loans. So when Obama unveiled his student loan relief plan, I was intrigued. Unfortunately, I’m not really seeing anything new enough to require an “unveiling”.
The president’s plan is to be enforced by executive authority which is good (in my opinion) because it won’t need Congress but it is pretty limited in scope.
Heather Jarvis at Student Loan Expert breaks it down:
The changes will reduce interest rates for some graduates, and will have a significant impact on student loan payments for current students.
The Administration will:
Offer a limited-time discount (including a .5 percent interest rate reduction) to the about 6 million borrowers who have at least one Direct Loan and at least one FFEL loan.
Make more generous Income-Based Repayment (IBR) terms available sooner for about 1.6 millioncurrent students by moving up the effective date for improvements to the Income-Based Repayment plan from 2014 to 2012.
Student loan borrowers who have graduated or are no longer in school can choose the current Income-Based Repayment plan. Fewer than 450,000 borrowers participate in the Income-Based Repayment plan, and millions more of the 36 million Americans with federal student loan debt can likely benefit. The administration says it will take steps to let borrowers know about IBR and make it easier to participate in IBR.
This seems to me to be a very small, very early first-of-the-first kind of steps in helping with student debt burden. “The administration is clearly acting in the interest of students, and this is a good thing in the current environment,” said Terry Hartle, senior vice president of the American Council on Education. “But the fact remains that the biggest student loan issue facing us is the doubling of interest rates in eight months.”