What Student Loan Borrowers Need to Know about Obama’s Student Loan Initiatives
Don't miss the updated and expanded version of this post: Will the President's Student Loan Initiatives Help You?
If you can’t work with them, work around them.
Yesterday President Obama’s administration announced student debt relief initiatives that don’t depend upon getting Congress moving. Unfortunately, there is only so much executive action can accomplish, and the initiatives are limited in scope.
The changes will reduce interest rates for some graduates, and will have a significant impact on student loan payments for current students.
The Administration will:
- Offer a limited-time discount (including a .5 percent interest rate reduction) to the about 6 million borrowers who have at least one Direct Loan and at least one FFEL loan.
- Make more generous Income-Based Repayment (IBR) terms available sooner for about 1.6 million current students by moving up the effective date for improvements to the Income-Based Repayment plan from 2014 to 2012.
Student loan borrowers who have graduated or are no longer in school can choose the current Income-Based Repayment plan. Fewer than 450,000 borrowers participate in the Income-Based Repayment plan, and millions more of the 36 million Americans with federal student loan debt can likely benefit. The administration says it will take steps to let borrowers know about IBR and make it easier to participate in IBR.