Understanding Obama’s New Student Loan Plan


August 15, 2014
by Suada Kolovic
With the final month of summer rapidly slipping away, now is the time to buckle down and finalize how you're going to fund your college education. Whether that entails a full-ride scholarship (way to go!), an impressive financial aid package or even necessary loans, it's important to understand your options. Some of you might even be considering President Obama's Pay As You Earn Repayment Plan...if you can figure out what it involves or if it's even an option. If you're confused about this plan, you're in luck: U.S. News and World Report has broken down the big questions you need answered below:

With the final month of summer rapidly slipping away, now is the time to buckle down and finalize how you're going to fund your college education. Whether that entails a full-ride scholarship (way to go!), an impressive financial aid package or even necessary loans, it's important to understand your options. Some of you might even be considering President Obama's Pay As You Earn Repayment Plan...if you can figure out what it involves or if it's even an option. If you're confused about this plan, you're in luck: U.S. News and World Report has broken down the big questions you need answered below:

  • Will these updates help me? If you have federal student loans, maybe. Starting in 2015, borrowers who took out loans before October 2007 or stopped borrowing by October 2011 will be eligible to take advantage of the Pay As You Earn Repayment Plan. Government officials estimate this includes an additional five million people.
  • How much could I save? Now, most federal loan borrowers are eligible for income-based repayment – a different repayment plan that has the same premise as Pay As You Earn. Unlike Pay As You Earn, however, IBR caps payments at 15 percent of one's disposable income and forgives the balance after 25 years of payments. Those differences could mean a lot, both in monthly payment amount and in the total amount paid over time.
  • Didn't the president mention loan refinancing too? He did, but in relation to a bill that Massachusetts Senator Elizabeth Warren introduced last month called the Bank on Students Emergency Loan Refinancing Act. This legislation would allow federal and private student loan borrowers with older, higher interest loans to consolidate them within the direct loan program at today's lower fixed interest rates. That bill still has to pass both the Senate and the House, something that may not happen because Republicans are opposed to paying for the bill with a gradual increase in tax rates for those in the higher income brackets.
  • What else should I know? There is still a long way to go before the president's executive action takes effect: December 2015 is the target implementation date. The overall plan includes quite a few other ideas that will make a difference to student loan borrowers, like improving financial incentives for federal student loan servicers to help borrowers stay out of default, making it easier for active-duty military to receive benefits and increasing communication partnerships with entities such as the IRS and tax companies to ensure consumers are aware of their higher education rights and benefits.

What do you think of the president's attempt to ease the financial burden associated with student loans? Let us know your thoughts in the comments section. And for more information on federal funding, visit our Financial Aid section.

Getting more college financial aid doesn’t have to be a relentless search. Scholarships.com is totally free. Connect with our massive database of millions of college scholarships at any time by searching for awards in a variety of ways. Scholarships.com offers the quickest and easiest way to search for, apply to, and win college scholarships. Start making your college education affordable or perhaps even free, by conducting a free college scholarship search at Scholarships.com.

Discuss

Share your thoughts and perhaps thousands of students will benefit from your unique insight on the subject!



If you can read this, don't touch the following fields


 

Michael A.  on  5/27/2015 12:00:19 AM commented:

Education, vetted and effective, is our nation's clear and present FIRST priority. Anything to the contrary is romantic drivel or worse, the product of a tainted and selfish (read: short-sighted) agenda.

Danita M  on  8/19/2014 6:58:44 PM commented:

I can recall hearing the president say that he had finally finished paying off his student loans; I think he said that in his second year in office. Therefore, I think he of all people understands the financial challenges student loans can cause. I applaud his efforts to try to ease the burden on future graduates. Elizabeth Warren is such a trooper fighting for better interest rates for us as well. I understand that she is also trying to stop allowing jobs to judge candidates based on their credit ratings as well. Why should a person be denied a job because they have poor credit. I am sure that the economy caused many people to inherit bad credit. That sounds like a way to keep a man down if you ask me. Way to go Elizabeth Warren and President Obama, thanks for looking out for us!

Valerie P  on  8/19/2014 6:52:13 PM commented:

In the same way that Lyndon Johnson and the Democrats created an enormous 'dependent class' through welfare reforms that now vote for the politicians that will keep those handouts coming, the Democrats now want to ensure that they will keep the college crowd voting them back into office term after term by keeping them beholden to the federal government through student loan repayments that are subsidized by the taxpayer. If the government would just get out of the student loan business altogether, the price of higher education would plummet. Why can't folks see this principle?

Toni K P  on  8/19/2014 4:54:29 PM commented:

I am a 2011 graduate with a $25,000. student loan. I have received Social Security disability since 2007 and believe there should be consideration on the front side of FAFSA. Obama is at least making a huge step for not just the young student but also for us older folks. I graduated at age 62 !

Darrian P  on  8/19/2014 4:39:29 PM commented:

Thank you Obama for trying. You are attempting to tackle alot of issues before the end of your presidency and I appreciate everything you do in attempt to improve our country.

Nicholas M  on  8/19/2014 3:49:53 PM commented:

While my family does not support socialism or programs that burden citizens to pay an ever increasing amount of their earnings in taxes, it would be nice if our taxes were diverted from supporting unnecessary wars to instead using those funds to make secondary education free for all citizens like some other countries do.


    Enjoy a seasonal treat this season with fall scholarships from Scholarships.com to help pay your college tuition bill. Harvest some of the largest dollar scholarships, most prestigious scholarships, and brand name scholarships out there with our list of October scholarships. These autumn scholarships are so good you'll scream! So hurry and apply for these scholarships due in October and don't let them fall by the wayside. For a complete list of scholarships due in October, click here.

Harvest Fall Scholarships for College

September 7, 2017 3:42 PM
by Susan Dutca
Enjoy a seasonal treat this season with fall scholarships from Scholarships.com to help pay your college tuition bill. Harvest some of the largest dollar scholarships, most prestigious
If you're pursuing or thinking of pursuing a career in coding, you may be one of the 75,000 aspiring developers to land an Android Scholarship or Web Development Schoalrship, sponsored by Google and Udacity. Google and Udacity have been partnered over the past two years and doled 1,000 and 10,000 scholarships for coders in 2015 and 2016, respectively.

Google, Udacity Offer 75,000 Scholarships for Coders

September 5, 2017 1:14 PM
by Susan Dutca
If you're pursuing or thinking of pursuing a career in coding, you may be one of the 75,000 aspiring developers to land an Android Scholarship or Web Development Schoalrship, sponsored by Google and
San Diego State University plans to offer a course titled Black Lives Matter: A Focus on Black Boys and Men in Education, which will be open to the public for enrollment this coming October. The course, which will cover topics of how black men are undervalued in the classroom, is under fire for featuring “speakers whose members have been accused of inciting violence.

Black Lives Matter College Course Faces Criticism

August 30, 2017 8:32 AM
by Susan Dutca
San Diego State University plans to offer a course titled "Black Lives Matter: A Focus on Black Boys and Men in Education," which will be open to the public for enrollment this coming October. The
More and more colleges are introducing free college scholarship programs, with more than 20 states currently on board. The latest states to join the free community-college program initiative are Arkansas, Indiana, Montana and Rhode Island. Some critics claim that, while the idea sounds great, free college may not actually help those who need it most.

Free College Introduced in 4 More States

August 23, 2017 9:15 AM
by Susan Dutca
More and more colleges are introducing free college scholarship programs, with more than 20 states currently on board. The latest states to join the free community-college program initiative are
The looming 1.4 billion student debt haunts not only college students and graduates, but blue-collar students as well. Dozens of truck drivers recount the industry's hopeful advertisement and how they are left in debt with thousands of dollars in training fees and poor job prospects.

Blue-Collar Students Trucking Through Student Debt

August 15, 2017 2:24 PM
by Susan Dutca
The looming 1.4 billion student debt haunts not only college students and graduates, but blue-collar students as well. Dozens of truck drivers recount the industry's hopeful advertisement and how

    Just because you're already in college - even halfway through or in your final year - doesn't mean you couldn't use more financial aid to help pay your college tuition bill. Scholarships for college students are everywhere, including undergraduate scholarships and scholarships for grad students. In fact, many of the prestigious scholarships and large dollar scholarships out there are offered to college students. We understand college students' hectic schedules and having to balance academics, athletics, and extracurricular, so we've put together a wholesome list of scholarships for college students to make things easier for you. Don't forget to check out even more scholarships for undergraduate students and graduate scholarships by conducting a college scholarship search:

Find Scholarships for College Students

August 9, 2017 2:17 PM
by Scholarships.com Staff
Just because you're already in college - even halfway through or in your final year - doesn't mean you couldn't use more financial aid to help pay your college tuition bill. Scholarships for
$7.3 million will be spent to create or expand free college education programs in New York prisons. Among the seven colleges who will offer the College-in-Prison Reentry Program at 17 state correctional facilities over the next five years is Cornell University.

NY to Spend $7.3M on College-in-Prison Program

August 8, 2017 9:56 AM
by Susan Dutca
$7.3 million will be spent to create or expand free college education programs in New York prisons. Among the seven colleges who will offer the College-in-Prison Reentry Program at 17 state

    School is starting again soon. For some, that may bring a sense of dread - back to early morning alarms, late night homework, and for others, having to start college applications or finding ways to pay upcoming tuition bills. If searching for and applying to scholarships wasn't on your summer bucket list and you're now scrambling to find last-minute college scholarships, don't worry. We took it upon ourselves to create a Back to School Scholarship list. Whether you're a high school student, incoming college freshman or returning college student, get financially ready for a new school year with these back to school scholarships:

Back to School Scholarships 2017

August 3, 2017 3:51 PM
by Susan Dutca
School is starting again soon. For some, that may bring a sense of dread - back to early morning alarms, late night homework, and for others, having to start college applications or finding