Department Of Education Proposes Repayment Options For Student Debt
Today, the average college graduate faces a debt of more than $26,000, and in response, the U.S. Department of Education’s Office of Federal Student Aid (FSA) announced a new outreach campaign focusing on borrowers that used federal loans to pay for those tuition bills.
The goal of the campaign is to educate borrowers about their repayment options, which includes increasing awareness for the income based repayment plans.
The Department of Education stated that the focus of this campaign was on the three following categories:
- Those who have higher-than-average debt, deferment, or forbearance due to financial hardships or unemployment.
- Those who have fallen behind in student loan payments.
- Those whose grace periods are ending soon.
The main goal is to make student debt manageable and to teach people about loan repayment options, which will help borrowers avoid common mistakes while providing general student loan advice.
Below lists the Federal Student Aid breakdown of the monthly payments and benefits of the Income Based Repayment Plans.
- Monthly Payments are:
- Based on income and family size
- Adjusted each year
- Usually lower than under other plans
- Never more than 10 year standard repayment amount
- Made over a period of 25 years
- Monthly payment amount will be 15 percent of discretionary income.
- If monthly IBR payment does not cover interest that accumulates on the loans each month, the government will pay unpaid accrued interest on your direct subsidized loans or subsidized federal Stafford loans for up to three consecutive years
- 25-year forgiveness
- 10-year public service loan forgiveness
This is one payment plan available to borrowers to ease the burden caused by student debt.
From now until mid-December roughly 3.5 million borrowers, who could benefit from the IBR plan, will be contacted by the FSA.
This outreach campaign is one aspect of the ongoing efforts of the Obama Administration regarding college affordability and accessibility. The Department of Education confirmed they will host four public forums across the country to gather information about the Administration’s proposals. These forums will work to improve college value and affordability.
The forums are open to the public. People that wish to present comments or feedback should register by emailing firstname.lastname@example.org with the subject line “Open Forum Registration.”*Update – The Department of Education has concluded their forums.
—Stephanie Bragdon is an intern with Generation Progress.
Posted on 29 November 2013
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