Obama on Monday signed an executive order that expands to as many as 5 million people a program allowing federal student loan holders to cap monthly payments at 10 percent of adjusted gross income. The program also includes debt forgiveness after 10 years for those who work for 501(c)(3) non-profits or in the public sector. For those in the private sector, they can stop paying off their loans after 20 years. Although the bill was signed on Thursday afternoon in a live press conference, the forgiveness of loans will not begin until the end of 2016 at which point current and former students will begin to see interest and repayment amounts dwindle automatically, eventually leaving everyone with a complete zero-dollar balance. Even while the government has decided to forgive loans from the public sector, private held companies such as Sallie Mae, the leading lender for higher education, still has sky-high interest rates and non-budging repayment schedules. With close to $1 billion in net income every year, Sallie Mae has stated that they are not interested in following suit with the governments plan for loan forgiveness. Students who are currently making payments or have defaulted on their loans can expect to receive a packet letter within the next 3 to 4 months detailing how their assistance loans will be forgiven and what percentage, if any, will be left owed to private companies and firms.
Posted on: Fri, 13 Jun 2014 01:45:33 +0000
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