New Rules for Federal Student Loan Repayment
Did you go to college to increase your earning potential, but end up saddled with debt instead?
Those struggling to repay their federal student loans recently gotten a break. As of July 1, 2009 The U.S. Education Department changed the terms of student loan repayment to allow borrowers to adjust their monthly payments according to their income. Previously, the monthly repayment amount was fixed and determined by the lenders.
Not only did repayment terms get tweaked, Education Secretary Arne Duncan noted the interest and fees associated with student loans will decrease.
The good news continues with the announcement that the U.S. Education Department will release $13 billion in grants from the fiscal 2009 federal budget for schools in low-income areas. Duncan also said graduates who dedicate their lives to working for the public school system or nonprofit organization and originally borrowed through the Direct Loan program can have their balance forgiven after 10 years.
Many of these changes were fueled by lobbying efforts by the Institute for College Access and Success. The Berkeley, Calif. non-profit group wanted the change as many times students graduate with mounds of debt that cannot easily be managed.