Introducing the New “Pay As You Earn” Student Loan Repayment Plan
Final regulations implementing the President's “Pay As You Earn” repayment initiative have just been published. The regulations provide for reduced payments for some federal student loan borrowers and improve the federal student loan disability discharge process. Highlights include: Eligible borrowers: Must not owe a balance on a federal loan as of October 1, 2007; AND Must receive a disbursement of a federal loan after October 1, 2011. Payments will be 10% of discretionary income with forgiveness after 20 years…
Pulling Yourself Up by Your Bootstraps is No Windfall: IBR Makes the American Dream Possible
A new report examines Income-Based Repayment (IBR) and the effect of pending changes to the program and analyzes how IBR affects borrowers over time as their incomes change. The New America Foundation released “Safety Net or Windfall: Examining Changes to Income-Based Repayment for Federal Student Loans” by Jason Delisle and Alex Holt, arguing that changes to Income-Based Repayment (IBR) should be better targeted towards low-income borrowers rather than “high-income borrowers with graduate and professional degrees.” …
The Private Student Loan Problem…
As many of you know, Heather is not a big fan of private student loans, considering their lack of borrower protections and flexibility when it comes time for repayment. In an editorial published Wednesday in the New York Times, the authors note how inconsistent loan servicing on the part of private lenders and a general lack of clear information on repayment terms during loan origination put private student loan borrowers at far greater risk of falling behind in their payments or defaulting than those who take out federal student loans. The…
Frustrated Student Loan Borrower Sings the Blues
According to a recent comprehensive study on private student loans by the Consumer Financial Protection Bureau, Americans now owe more than $150 billion in private student loan debt! Cumulative defaults on private student loans exceed $8 billion, and represent over 850,000 distinct loans. As many of you already know by now, Heather has a generally low opinion of private student loans due to their higher than average default rates, less flexible repayment plans, and fewer borrower protections as compared to their federal loan counterparts.…
Consumer Financial Protection Bureau Issues Annual Report on Student Loans
The Dodd-Frank Wall Street Reform and Consumer Protection Act established an ombudsman within the Consumer Financial Protection Bureau. Pursuant to the Act, the ombudsman prepares an annual report and makes appropriate recommendations to the Secretary of the Treasury, the Director of the Consumer Financial Protection Bureau, the Secretary of Education, and to Congress. The first annual report on student loans was issued yesterday and for those of us who follow the industry closely and who listen to frustrated student loan borrowers…
