Updates on College Costs
There is now a federal law that will increase the chance of getting college financial aid for families who will qualify upon application. This law will also help in offering grants to students who have plans of taking education as a course at the same time helping graduates to repay their student loans.
For Need-based Aid category also known as Pell grants, the news is that it will move up to a maximum of $ 5,400 annually for the next five years from its current maximum of $ 4,310. On the other hand, Stafford loans interest rates will drop by 3.4 % for the next for 4 years, which is half of the current rate.
For Loan Repayment category-
President Obama announced on Oct. 18 at the University of Colorado in Denver that college graduates would have an easier way to pay off student loans through the new “Pay as You Earn” plan.
The Pay as You Earn Plan, which was supposed to go into effect in 2014, will now go into effect in 2012 due to congress’s push by Obama. The plan will allow college graduates’ loans to not exceed 10 percent of the graduate’s discretionary income. After 20 years, any remaining debt will be forgiven, said Georgia Southern University’s Director of Financial Aid Division of Student Affairs- Connie Murphey
“Last year graduates (that) took out loans left college owing an average of $24,000. Student loan debt has now surpassed credit card dept. for the first time ever” said Obama in his speech addressing college students in Denver.
The old policy was that graduates had up to 10 years after they graduate, or leave school, to repay their student loans. College graduates also had to make payments of 15 percent, said Murphey.
The smaller payments will mean the payment time lasts longer, said GSU economics professor Anthony Barilla, Ph.D in economics.
“To the actual college graduate, if you kept their payments at 10 percent, that means they get to make smaller payments of their student loans and that also goes on for a longer duration, so there’s a plus and a minus to it,” said Barilla. “To the college graduate itself, it’s a longer duration of having to pay that loan.”
The college graduates that will not be affected are the students who received loans through private lenders such as banks and individuals, said Murphey.
“The ones that will not be affected is if students have a private loan through a lender, and a lot of students do. They go directly to a lender, they borrow money, it never comes through the school, it’s called a private loan,” said Murphey.
Moving on, the Public Service incentives category will help students in teacher-prep programs who are also committed to educate for four years after they graduate in the application for annual grants of $4,000 to cover the costs of going to college. Grants must be repaid in case they have decided to not pursue teaching.
Student borrowers can also have an incentive to go into a public position. This means that if they decide to work for a decade as a qualifying civil servant, the government shall then waive the loan balance of students to whose loan was provided directly by the government.
For more information on how your student can get money for college despite your income level, call me, Manuel Fabriquer, at (408) 918-3068. College Planning Abc, is dedicated to helping students find and get into the best colleges in the nation while saving you the most amount of money. Call today!