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Healthy Changes to the Student Loan System

By Magamet Borlakov, Fall 2010 - Online Exlusive

There is some good news on the student loan front. The healthcare bill which passed last spring means some real changes to how student loans are dispersed and paid back.

The bill streamlines the way we borrow by making all Stafford loans come directly from the Federal Government. Some of you may have noticed this when you didn’t have to choose a lender for your current financial aid packages. As graduate students we are eligible to borrow up to 20,500 a year at an interest rate at or below 6.8%. Grad PLUS loans will still allow us to borrow up to the cost of attendance minus our other financial aid. From private lenders the rate can be as high as 8.5%. The interest rate for Grad PLUS loans will now be capped at 7.9% a year. These are significant changes to the old system but they don’t make a big difference in our current stage of panic about student loan debt.

The more pressing issue for most students is how these changes will affect how we pay back our loans. Well, there is good news and there is better news. If you begin paying back your loans now you are eligible for income sensitive repayment, which can be no more than 15% of your income. Students who start taking out loans in 2014 will be able to sign up for income sensitive repayment that caps out at 10% of their income upon graduation. Also, consider that the new bill expands loan forgiveness. There are programs that will forgive student loan debt for those that devote 10 years of their career to a public service job such as working for a nonprofit, teaching, or working in a clinic.

Community College students will also benefit from the bill. “In 2010–11, the maximum Pell grant will raise $200 to $5,550. By some estimates, the maximum Pell grant could rise to $5,900 over the next decade,” according to an article in The US and News Report. This can make a big difference by allowing many low-income students to earn an associate’s degree without accumulating any debt.

So for most of you reading this, take comfort that you’re not alone and these are positive changes for us all. Student loan debt seems to be the dirty little of secret of higher education. These new changes will hopefully alleviate some of those sweaty palms. For further information on changes to student loans, check out the following links:


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