I did something I haven’t ever done before – I went to the house of representatives’ website… Yes, it is a slow and boring day today, forgive me. I did find one interesting tidbit of information that I’d like to share with you, especially those of you who are going to enter college.
A bill was recently passed by the Committee on Education and Labor called the College Cost Reduction Act. This new act has many cool features (as if laws can be cool) that will help countless number of Americans (I hope I can get some use out of it) with college loan expenses. Some notable facts from the bill and my comments:
- Cutting interest rates in half on subsidized student loans over the next five years.
I hope this applies to those of us with outstanding loans. I could really use the interest rate help.
- Making student loan payments more manageable for borrowers by guaranteeing that borrowers will not have to pay more than 15 percent of their discretionary income in loan repayments, and allowing borrowers to have their loans forgiven after 20 years.
This is a mixed blessing in that it can lower the monthly payment, but also increases the amount of interest paid. Students may make the minimum payments, but it may not be enough to pay off the entire loan in a reasonable amount of time. However, if rates are low, the interest accrued won’t be so bad compared to what you could get with the money invested.
- Increasing federal loan limits to provide borrowers with additional assistance in paying for college and to help them rely less on costlier private loans.
Ah yes, the most important provision. I wish I had this when I started. Private loans are indeed costlier. If I had been able to get more out of the federal loans, I would be in much better shape today. Expect to see falling rates from private loans as well – they’ll be competing against the federal government now for your business.
- Containing college costs.
Leave it to congress to be as vague as possible. Your guess is as good as mine.
- Providing upfront tuition assistance to qualified undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
This seems to be always an issue. Unfortunately all it does is put new, inexperienced teachers, in the inner city schools. Thus, they fail according to the no child left behind act, and thus don’t get anymore money. See a trend?
- Providing loan forgiveness for first responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, librarians and others.
The tax system is designed to promote and deter certain activities as is the case here.
- Revising policies to allow public servants to have their loans forgiven after 10 years.
I’m not sure if I understand this correctly, you pay down the loan for 10 years and then get the rest paid off? If you had a 10 year payment schedule, what help is this provision? Maybe if you had a 20 year schedule it’d help.
Those are some of the provisions that the bill had, I hope it gets passed and lasts longer than the 5 years they put it in effect for. If they can spend $300 billion on a war, what’s $20 billion to education going to hurt?