President Barack Obama on Wednesday proposed shifting federal student loans to market-based rates rather than the current system in which interest rates are fixed by law and subject to congressional whim, the Chicago Tribune reports. The new interest-rate approach is one of several measures included in President Barack Obama’s fiscal 2014 budget proposal to contain growing student loan debt and make higher education more affordable. The president’s budget stands little chance of being enacted into law, but the proposals could help jumpstart congressional debate about reforming student loans. Obama’s plan also calls for making the rate on new federal student loans a market interest rate that would remain fixed for the life of the loan. The proposal calls for expanding repayment options so borrowers do not have to pay more than 10 percent of their discretionary income on student loan bills.…Read More
Thousands of students this year unexpectedly had to stay at home, transfer to a less expensive school, or find new money after the U.S. Department of Education quietly changed how it evaluated the credit of parents applying for a federal PLUS loan, reports the Associated Press. The greater scrutiny affected families and schools everywhere, but historically black colleges were hit particularly hard, because so many of their students come from low-income families dependent on PLUS loans. In recent years, as many as a third of all black college graduates had used PLUS loans, a proportion twice as high as the rate for all schools, according to one estimate. The Education Department said the changes were made as part of an effort to more closely align government lending programs with industry standards and decrease default rates. Before the changes, the loan program looked at whether an applicant had an adverse credit history for an account in the past 90 days. Now, the program looks for delinquent accounts during the last five years. While many colleges worried about the denials, others said the changes prevented lower-income families from being saddled with debt they can’t afford……Read More
Congress might have averted a doubling of interest rates on millions of new federal student loans, but the fix is only for a year, leaving students on edge over whether they’ll face a similar increase next summer.
“It’s scary,” said Faith Nebergall, a student at Indiana University whose loans currently total upward of $20,000. “And it’s unfair to kind of be kept in the dark as to how much money we owe.”
Under an agreement passed June 29, interest rates on new subsidized Stafford loans will remain at 3.4 percent for another year. That’s estimated to save 7.4 million students about $1,000 each on the average loan, which is usually paid off over 10 or more years.…Read More
Rep. Ron Paul, R-Texas, is suggesting the Department of Education should be dissolved in an effort to save money towards the federal deficit, Yahoo! News reports. As such, Paul wants to eliminate the federal student loan program if he is elected president. He told Sunday talk shows today that he would eventually phase out federal student loans. Millions of American students take out loans to go to college. Here is a look at the massive amount of statistics regarding these low-interest loans, by the numbers……Read More
College and university websites should require prospective students to check their eligibility for federal student aid before private loans with ever-changing interest rates are presented as a legitimate option, according to a report from a nonprofit group advocating for greater college access and affordability.
One-on-one counseling, either in face-to-face meetings or over the phone, is the “most effective” way to find college loans that won’t cost student thousands of dollars in exorbitant interest charges, while web-based counseling makes it “too easy [for students] to acknowledge receiving detailed information without actually reading or comprehending it,” said the report, published by The Institute for College Access & Success (TICAS).
TICAS, a California-based nonprofit organization, is a prominent supporter of the Income Based Repayment (IBR) plan, which allows college students to adjust their federal student aid payments according to their reported income. The plan went into effect in 2009.…Read More
If you need to borrow to finance your education, federal student loans should be first on your menu. Congress and the U.S. Department of Education regulate federal student loans, setting maximum interest rates, borrowing limits, and other important loan terms, reports U.S. News & World Report. These loans come in loads of different flavors. Here’s a taste of what you might borrow:…Read More
A government report released Aug. 4 details “fraudulent” practices among recruiters for some for-profit colleges, and public criticism of the popular institutions has mounted as recent statistics show that at least one for-profit university received $1 billion in federal Pell Grants during the 2009-10 academic year.
Investigators from the Government Accountability Office (GAO) posed as college students and found that four out of 15 institutions they examined “encouraged fraudulent practices” to secure federal student loans, and representatives from all 15 colleges “made deceptive or otherwise questionable statements” to the undercover students, according to a report published on the GAO’s web site.
The extensive report is the latest in a string of negative publicity for for-profit schools, which include industry giants such as the University of Phoenix, Kaplan University, and DeVry University.…Read More