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We’ve just received an email from our good friend Tod Venerable who is sending over some great information (but read him first!)
If you’re interested in getting your student loan debt paid off, make sure you’re using these options up! These options were not only developed by Tod, they have been tested by others to be safe. He’s going to show us how he gets his loans discharged. You may want to use them yourself!
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Lower Interest Rates For Student Loans
Why lower interest rates could save students money
There is a lot of controversy surrounding student loans today. Many people think they are predatory in nature; however, others believe they allow those who need to borrow to do so without being burdened with debt. There’s no doubt that college tuition costs have been rising at alarming rates over recent years, and many parents and students are struggling just to make ends meet. Lowering student loan interest rates would help ease some of these burdens. As of now, federal government-backed student loans carry a fixed rate with their variable rates tied to the prime lending rate. Currently, the prime lending rate is set to around 5% (the lowest level since 2008). Students take out a loan that is pegged to this rate, but if it rises above 6%, they are forced to adjust their payments upward. If banks were allowed to offer low interest rates, borrowers would likely benefit. Additionally, the cost of borrowing money could decrease, making education less expensive for students.
How lower interest rates could save taxpayers millions
The Department of Education spends billions of dollars each year on subsidized student loans. Much of this spending goes toward administrative costs. Lowering interest rates would mean that fewer taxpayer dollars could go towards these expenses, which would reduce the budget deficit. In addition to cutting the amount spent on administration, lowering interest rates could save taxpayers thousands of dollars by reducing the amount of money owed to the US Treasury. According to a report released by the Congressional Budget Office in 2011, the average borrower paid $1,000 per year in interest on his/her student loans. A drop in the interest rate would lead to a significant reduction in the amount of money borrowed. Because the financial burden placed on students with hefty loans is often transferred onto taxpayers, having millions of dollars taken off of the books would greatly benefit federal coffers.
Student loan reform is already underway
Last month, Senator Elizabeth Warren introduced legislation aimed at overhauling the way student loans work. One of the major pieces of her proposal involves repealing the current “Pay as You Earn” plan for student loans. Under this system, interest accumulates while a person is enrolled in school and after graduating. After graduation, monthly payments remain constant until the account reaches its maximum balance, at which point the remaining principal plus any accrued interest must be repaid. Warren wants to replace the current repayment model with something called “Fair Payday.” Her bill would cap how much total interest can accrue, requiring borrowers to repay only what they owe once a month. Borrowers would not pay anything extra unless their earnings went down between semesters. She estimates that her plan would increase savings for borrowers by approximately 30%.
Lower Interest Rates For Student Loans
Increase federal student loan limits to $9,250 per year.
A higher limit would mean students could borrow more money to pay for college without paying tens of thousands of dollars in interest over time.
Eliminate private lenders’ right to impose prepayment penalties on borrowers who refinance their loans before they reach 10 years.
This rule makes refinancing less attractive for many students, especially those graduating with debt loads nearing the maximum amount allowed under current law.
Cap annual interest rates at 8 percent on subsidized Stafford loans, and 6 percent on unsubsidized Stafford loans.
If Congress fails to act, subsidized Stafford loan rates could double to 12 percent while unsubsidized Stafford loan rates would jump to 9.5 percent.
Create a new tax credit of up to $2,500 for undergraduate students who attend public colleges and universities.
The credit would help more than 2 million low-income families afford college tuition, according to a study by the National Center for Education Statistics.
Require schools receiving financial aid to certify that no more than 30 percent of their revenue comes from tuition and fees.
This requirement would ensure that taxpayer funds aren’t being diverted toward increasing the cost of attending college.
Allow students to borrow a total of $23,000 annually for four years of Pell Grants.
Currently, students can only access a fixed sum of $5,815 each academic year.
Create a new program to make $6 billion worth of direct loans available to eligible community colleges and technical institutes.
Students could use these loans to cover tuition costs at schools outside of their home state, helping them find jobs after graduation.
Lower Interest Rates For Student Loans
The financial services industry is constantly evolving with innovations in technology and processes. In order to stay competitive, companies have been forced to become flexible and adaptable. One area where many have turned to is student loans. Today’s students are faced with higher education costs than ever before. As tuition continues to rise, many students feel pressured to borrow money in order to pay for their education. While borrowing money may seem necessary at first, some say they should not have had to take out these loans in the first place. Many people argue that the government should lower interest rates on student loan debt. However, others believe that lowering interest rates could encourage even more student lending. A new bill passed by Congress would help ease the burden for college debtors by giving them access to cheaper loans. Supporters of this bill say that the legislation will save taxpayers millions of dollars while helping college graduates get a leg-up in starting families and careers.
Interest Rate Reduction Bill Passed By Congress
On September 27th, 2017, President Donald Trump signed the Federal Restructuring Education Loan Program Act of 2017. This new law was crafted by Rep. Maxine Waters (D-CA) and Sen. Bob Corker (R-TN). This act allows borrowers who want to refinance their existing federal student loans due to rising interest rates to do so without being penalized. Refinancing is a way of taking out a new loan with a lower rate than what was originally borrowed. This lowers the total amount owed on each individual loan and makes repayment easier. Currently, the average student loan borrower pays over $3500 per year in interest payments alone. This new law aims to make refinancing more accessible to borrowers.
Supporters Say Legislation Will Save Taxpayers Millions
Supporters note that this legislation will save taxpayers around $20 billion over ten years. These savings will go towards reducing the national deficit as well as helping to fund public schools. Supporters of this bill claim that the government will receive approximately $7.8 billion over the course of 10 years in fees. This money would then be deposited back into the U.S. Treasury. According to supporters, this represents about one third of all the revenue received from the federal student loan program. Other estimates suggest that the bill will cost the government less than $10 million per year.
Opponents Say Refinancing May Encourage Students To Take Out More Debt
Many opponents of this reform disagree with the idea of lowering interest rates. They fear that such changes would lead to even more student loan borrowing. Critics say that current law already encourages students to borrow as much money as possible. They believe changing the structure of loans could cause students to load up on additional credit cards and use high-interest personal loans.
Others say that the government already provides numerous incentives for students to borrow. If the government doesn’t offer any assistance to those seeking low-cost loans, critics say that students may simply turn to private lenders. When students borrow money from these private lenders, they often end up paying more than if they’d taken out a traditional student loan. Opponents point out that currently fewer than 1% of people actually use private alternatives to student loan programs.
Lower Interest Rates For Student Loans
Lower interest rates for student loans
In April 2012, President Obama signed the American Reinvestment and Recovery Act (ARRA) into law. ARRA created the Pay As You Earn plan, which allowed federal student loan borrowers to refinance their loan payments at lower interest rates than they were currently paying. Unfortunately, the Federal Reserve Board changed its mind about lowering interest rates in March 2014, and this change means current borrowers have higher monthly payments than before.
Students who borrowed money for college between July 2010 and June 2015 could benefit from the ARRA’s lower interest rate program. Borrowers had until August 2016 to take advantage of these low interest rates. A majority of students took full advantage of the program, according to data collected by Refinitiv. Between 2013 and 2017, over $29 billion was saved on government-backed student debt due to the reduced interest rates.
More loan forgiveness options
The new changes mean that borrowers may qualify for additional forms of loan repayment after graduation. These repayment plans allow borrowers to make smaller monthly payments while still making some of their loan payments disappear entirely. Repayment plans can be taken out any time after January 1, 2006, regardless of whether a borrower makes extra payments, graduates, or even if he or she defaults on a loan.
Borrowers who are eligible for income-based repayment plans (IBR) can pay just 10% of their discretionary income toward a loan each month. They can make larger payments if they choose, but they won’t have to worry about accumulating interest charges. Under the Public Service Loan Forgiveness Program (PSLF), eligible borrowers can get rid of their student loans completely after 10 years of education and working for certain public service employers, including teachers, social workers, firefighters, police officers, and nurses. Eligible borrowers automatically meet PSLF requirements after they complete 120 monthly payments, but the program ends after 20 years unless they stop working in the public sector.
More loan consolidation options
Since the passage of the Affordable Care Act, the Department of Education has allowed people to consolidate their loans under a single payment plan. This option reduces the number of monthly installments from three to two. The Department of Education says it is now helping up to 2 million borrowers save more than $50 billion annually.
There are several different ways to consolidate a loan. There is automatic loan consolidation, which requires little action on the borrower’s part; fixed or variable rate consolidation, where borrowers receive a fixed rate on a set amount of money for 30 years; and private student loan refinancing, which involves obtaining a new loan from a private lender with a slightly longer repayment period.
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