An act of Congress that took effect July 1 makes student loans more affordable to repay by allowing borrowers to cap their monthly payments.
The benefits are kicking in as part of the College Cost Reduction and Access Act, which was enacted in 2007 under a Congress then newly under the control of the Democratic Party. The legislation provided for $20 billion in college aid for families.
"An affordable college education is essential to the American dream,” Delegate Donna Christensen said in a statement released by her office this week. “This new program gives our students the help they need to get a quality college education that will propel them to future success. It’s is a remarkable opportunity for our young people.”
Nationwide, about 5.5 million students take out subsidized student loans each year.
Students can borrow for higher education with less worry that their loan payments will overwhelm them if they don’t immediately land a high-paying job upon graduating because the act lets them cap their monthly loan payments at a maximum of 15 percent of their discretionary income, with "discretionary" defined as what a borrower earns above 150 percent of the poverty level for their family size.
Anyone who pays or will have to pay more than the cap is eligible. And after 25 years in the program, borrowers’ remaining loan balances, including interest, will be completely forgiven.
The act also gives lower interest rates on need-based federal student loans and higher Pell Grant scholarships for low- and moderate-income students. On July 1, interest rates on need-based federal student loans dropped 6 percent to 5.6 percent and will drop several more times until they reach 3.4 percent in 2011.
The maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 – more than $600 above last year’s award. About 6 million students receive this scholarship each year.
Also, college graduates, or workers of any age who enter public service professions, will have their federal college loans completely forgiven after ten consecutive years of service and loan repayments. This affects firefighters, public defenders and prosecutors, first responders, law enforcement officers, early childhood educators, men and women serving in the military, among others.
The benefits are kicking in as part of the College Cost Reduction and Access Act, which was enacted in 2007 under a Congress then newly under the control of the Democratic Party. The legislation provided for $20 billion in college aid for families.
"An affordable college education is essential to the American dream,” Delegate Donna Christensen said in a statement released by her office this week. “This new program gives our students the help they need to get a quality college education that will propel them to future success. It’s is a remarkable opportunity for our young people.”
Nationwide, about 5.5 million students take out subsidized student loans each year.
Students can borrow for higher education with less worry that their loan payments will overwhelm them if they don’t immediately land a high-paying job upon graduating because the act lets them cap their monthly loan payments at a maximum of 15 percent of their discretionary income, with "discretionary" defined as what a borrower earns above 150 percent of the poverty level for their family size.
Anyone who pays or will have to pay more than the cap is eligible. And after 25 years in the program, borrowers’ remaining loan balances, including interest, will be completely forgiven.
The act also gives lower interest rates on need-based federal student loans and higher Pell Grant scholarships for low- and moderate-income students. On July 1, interest rates on need-based federal student loans dropped 6 percent to 5.6 percent and will drop several more times until they reach 3.4 percent in 2011.
The maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 – more than $600 above last year’s award. About 6 million students receive this scholarship each year.
Also, college graduates, or workers of any age who enter public service professions, will have their federal college loans completely forgiven after ten consecutive years of service and loan repayments. This affects firefighters, public defenders and prosecutors, first responders, law enforcement officers, early childhood educators, men and women serving in the military, among others.
To offset the cost of these student benefits, which Christensen described in a release from her office as "the single largest investment to help Americans pay for college since the GI Bill," the act reduces subsidies that the government pays to banks.
