Whether one majored in mathematics or modern dance; whether one completed their post secondary education in four years or made a victory lap or two, there’s one thing many college students have in common – student loans.
The good news is that there is hope. With an objective to alleviate the burden of student loan debt, President Barack Obama recently expanded a program that lets borrowers pay no more than 10 percent of their income every month.
For example, a college graduate earning $39,000 a year but carrying $26,500 in loan debt, would have monthly repayments reduced by $126 per month and $1,500 a year.
Obama recently signed a presidential memorandum on this measure that could help an estimated 5 million student loan borrowers lower their monthly payments.
“I’m only here because this country gave me a chance at higher education,” Obama said, who was able to attend college with help in the form of loans, grants and scholarships. “This is why I feel so strongly about this.”
An existing repayment plan Obama announced in 2010 lets borrowers pay no more than 10 percent of their monthly income in payments, but was only available for those who began borrowing after October 2007. Obama’s updated memo expands that program by opening it to those who borrowed anytime in the past.
The plan is expected to be in place by December 2015, after the Education Department puts the change into effect through the regulatory process.
The Senate is expected to debate the legislation soon, but faces significant opposition from Republicans, who disagree with the Democrats’ lack of a plan for how to pay for it.
“Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education, or improve access to federal student loans – nor will it help millions of recent graduates struggling to find jobs in the Obama economy,” House Speaker John Boehner said in a statement.
Many hope a sound resolution is found soon, especially all of the Hoosiers who will inevitably have student loan debt.
According to a report by the Indiana Commission for Higher Education, the rate of high school graduates in Indiana that are going to college is rising. Some Indiana colleges have added financial literacy to its course studies in efforts to educate students on what to expect after graduation. The commission is working to educate students earlier.
“Learn More Indiana has three campaigns one of which is called Cash for College with messages going all the way to kindergarten. Among the messages is saving for college, scholarships, programs like 21st Century Scholars, understanding financial aid, responsible borrowing and timely repayment of your student loan,” said Jason Bearce, associate commissioner for strategic communications and initiatives and director of Learn More Indiana for the Indiana Commission for Higher Education.
For students who are considering a post secondary education, Bearce said students should find a healthy balance between majoring in their subject of choice despite cost and practicing healthy borrowing. He adds that a student should borrow no more than their expected annual earnings once they finish college. The commission offers information on earning expectations to give students a guide on projected income.
Once students choose a strategic and cost effective way for paying for college, Bearce said the next goal is to actually complete college. Students don’t want student loan debt and no college degree to show for it.
The commission is also working with Indiana’s workforce to create jobs for college graduates, however students also have a responsibility in securing a job.
“Students should make connections with employers before they graduate through internships, work study experiences, part time jobs – there’s a number of ways,” said Bearce. “Then once they graduate, they’re better prepared for the workforce.”
For more information on the Indiana Commission for Higher Education, call 800-992-2076 or visit In.gov/learnmoreindiana.
