Obama plans to cap student loan payments
Posted by Natalie Zutter , Jan, 2010 @ 10:59 am
Good news for those paying off federal student loans:
President Obama will propose a plan to cut the student loan payments of millions of Americans during his State of the Union address, the White House announced Monday. The president’s plan would cap payments on federal loans at 10% of a borrower’s income above a set minimum, defined as 150% of the poverty level for the borrower’s family, and allow loans to be forgiven after 20 years instead of 25.
For borrowers with a family of four, the federal poverty level is $22,050. Under the president’s plan someone who earns less than 150% of that amount, or $33,075, would owe nothing on a monthly basis. Those with higher incomes would have monthly student loan payments that equal 10% of their income above $33,075.
…Under the new plan a borrower with an adjusted gross income of $30,000 who owes $40,000 in student loans would pay about $115 a month to service his student debt, down from $170 a month under the current system.
Currently, borrowers are paying 15% of their income on monthly payments. The proposed plan could cost the federal government up to $1 billion in five years. What do you think of Obama’s proposal?
[Via Forbes]
[Image source: ABC News]
Tags: Money, Obama, student loans
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debt consolidation says – reply to this
I know this is really boring and you are skipping to the below comment, but I wanted to throw you a big thanks – you cleared up some things for me!
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medical insurance says – reply to this
Well, we pretty much already let anybody get into college who wants to, and because they have been taught in high school to expect top grades, to pass, too. And since it is obvious to even the right that the only path to success is through college, we MUST give everybody a college degree, too. And we might as well pay for it, while we’re at it. At this point the Obama Administration and Congress have foregone any pretense about fiscal responsibility. It’s government takeover time, and sock it to the taxpayer, as they redistribute our hard-earned dollars to those who haven’t earned them, with a 30% rakeoff for themselves.
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