Sometimes I wish I had listened to my family while deciding where to go to school.
You did it! You graduated! But now you have to pay off what seems like $1 million worth of student loans. Fortunately, you might soon see some help. (photo courtesy of Flikr user FIDM)
Much to the chagrin of my New-Jersey-related-university-graduate mother (Rutgers), and aunt (Rutgers) and cousins (The College of New Jersey, Rowan), I packed up after high school and chose dear old, someone else’s state. And now I — not the State of New Jersey, which at one time offered me some cash to stick around — am footing the bill.
Call me stupid for not taking the scholarships and running, but I wanted to go somewhere not within 50 miles of my childhood home. I got to experience living in the 18- to 22-year-old heaven that is State College and all the fun and academia that goes with it (studying does go on there, I promise).
Before college, I had no concept of what kind of financial burden student loans would have on my post-graduation life. I was lucky enough to have generous and able parents who shouldered the burden of most of my college expenses (and now my sister’s). But I took on an extra major in the end of my junior year, and joined the ranks of the Student Loan Payers of America to pay for a second degree.
And while I’m luckier than most (my loan payments could be much larger than the $550 per month they are), and my loans are almost halfway paid off, the monthly deduction from my bank account has been a large-scale burden for a somewhat-more-than-entry-level paycheck.
But I’m not alone.
Today, there are 23 million borrowers with $490 billion in federally-backed loans. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients. Six months after graduation, those loans usually need to being to be paid off. And that can pose a huge burden for someone who has a bunch of other bills to attend to (first car payment, rent, electric, heat, water, cable, etc.)
But I, and the rest of you student loan payers out there might soon see some help!
President Barack Obama today outlined a plan to allow millions of student loan recipients to lower their payments and consolidate their loans, to hopefully lessen the burden of the No. 2 (and in the case of many twenty-somethings No. 1) source of debt.
His plan would accelerate a measure passed by Congress that reduces the maximum required payment on student loans to 10 percent of discretionary yearly income, possibly beginning next year.
The plan also would allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate. The consolidated loan would have an interest rate that was lower than the others were before.
In total, the measures could affect more than 7.5 million borrowers, and the changes could save some borrowers hundreds of dollars a month, according to Education Secretary Arne Duncan. The White House even said the plan would pose no additional cost for taxpayers.
Do you think this aid is too good to be true? Or is it a step in the right direction to making college more affordable and allowing recent college grads to get on their feet more quickly?
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