With many former students leaving college with tens of thousands in debt, student loan programs and forgiveness is a critical issue for both people in their 20s just beginning their careers and their middle class parents.
While the Stafford loans affect recent graduates nationwide, it’s hardly the only response the federal government has formulated to deal with the rising costs of college. The Income-Based Repayment Plan was passed by Congress during the tail end of the George W. Bush administration in 2007, but took two years to go into effect. The program, which limits repayment of federal student loans based on the borrower’s income and family size, can limit payments to as little as 15% of the borrower’s discretionary income. In addition, the government will waive the remaining debt obligation if the full amount is not paid within 25 years, or within 10 years for graduates in certain professions, such as teaching or law enforcement.
Two years ago, the current Obama administration passed legislation to expand the existing forgiveness provisions which is scheduled to go into effect in 2014. Rather than 15 percent, borrowers would be required to pay as little as 10 percent of their discretionary income each month, and have their debt waived after 15 years rather than 25. Obama has tried to speed up the regulations, and can put these into effect by the end of this year if Department of Education regulations can be changed through administrative procedures by November 1.
Elbot Carman, a recent Masters graduate attempting to embark on a career as a graphic designer is making so little money that he has had to move back in with his mom in Georgia and fortunately qualified for the government programs and has been able to significantly lower the amount he’s required to pay every month. However, it’s still problematic. “Ideally, student lending needs to die, it really does. It’s just not sustainable,” a frustrated Carman told Reuters.
One major issue regarding the efficacy of these programs is lack of knowledge. While these programs have the potential to help graduating students for many years after their college experience is over, many aren’t familiar with all of the government initiatives in place. Deanne Loonin, head of the National Consumer Law Center’s Student Loan Borrower Assistance Project told Reuters that that, “I think it provides much needed relief for people,” referring the these programs, and that “they’re very underutilized.”