Useless Student Loan Changes

6 Obama Executive Orders Will Cost Taxpayers Billions: $15.4 Billion To Create A ‘New Repayment Plan’ For Student Loans

According to the 2016 budget, Barack Obama wants to “reform and streamline income-driven repayment to ensure that program benefits are targeted to the neediest borrowers and to safeguard the program for the future.”

Under his proposal, a modified Pay As You Earn plan would be the only income-driven repayment plan for borrowers who originate their first loan on or after July 1, 2016.

Currently, federal student loan borrowers have a number of income-driven repayment options available. Eligibility for each plan depends on the loan’s type and age. Standard income-based repayment caps payment at no more than 15 percent of the borrower’s discretionary income and allows any remaining balance to be forgiven after 25 years of payment, or after 10 years for those working in public service.

A more generous form of income-based repayment, known as Pay As You Earn, is only open to newer borrowers and it’s expected to be opened up to more borrowers by the end of this year. It caps payments at 10 percent of discretionary income and allows forgiveness after just 20 years. Older student loans are eligible for other income-contingent repayment options.

Obama’s proposal would make Pay As You Earn the only income-driven plan available for borrowers moving forward, but it would also enforce stricter limits on benefits. Obama is also recommending capping the amount of interest that can accrue when a borrower’s monthly payment is insufficient to cover the interest.

All of these changes would only apply to future borrowers. Students who borrowed their first loans before July 1, 2016 would continue to be able to select among the existing repayment plans. It’s also worth nothing that the president’s budget contains a re-estimate of costs for the federal student loan program, showing a shortfall of about $21 billion thanks to the expansion and more widespread adoption of income-driven repayment plans. That could make funding for new higher education-related programs a hard sell in Congress.

http://conservativeamerica-online.com/15-4-billion-to-create-a-new-repayment-plan-for-student-loans/

Comments

Those few students who actually got real degrees, like a BSEE and who actually got engineering jobs will pay. Most students who got useless degrees and who find themselves working for low wages in service sector jobs have no discretionary income. This plan does not solve the problem. It incorporates the problem into a continuing welfare program. The current cost of education is unsustainable and would get worse under this Obama plan.  The quality of education has declined over the past several decades.  Too many students graduate from college without basic skills.  Students and parents need to be very careful with their money.

The trade agreements that off-shored US jobs beginning in 1993 and the excessive immigration policies beginning in 1989 resulted in no jobs for college grads.  Rather than fixing the problem Sallie Mae took over all student loans. This has resulted in the $1 trillion student loan problem.

This is identical to the mortgage loan crises that caused the 2008 Meltdown.  Unqualified borrowers were given loans they could not repay.  So now, student loan borrowers who would not have qualified for loans in past years are demanding a bailout.

It’s time to get the federal government out of everything except the “enumerated powers” granted them in the US Constitution (as written).  They screw up every unconstitutional power they assume.

Norb Leahy, Dunwoody GA Tea Party Leader