People saddled with student debt are warming up to the government's generous offer to cap their monthly loan payments to a percentage of their earnings. Use of so-called income-driven plans has gone up 56 percent since last year, with 3.9 million borrowers enrolled, the Education Department said Thursday.Even though the effort is paying off, the government still has another pressing problem on its hand: making sure people aren't kicked out of the program for missing deadlines.
Hundreds of thousands of borrowers are falling out of income-driven plans for failing to verify their income every year, undermining the effectiveness of the program. At least 57 percent of people enrolled in the program as of October 2014 did not re-certify on time,
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"There's more work to do, we won't stop fighting to help people who are struggling to pay back their student loan debt, but the fact that more and more borrowers are taking advantage of the opportunity to cap their monthly payments is a good sign."The government's flexible repayment plans are critical as student debt tops $1.3 trillion and people struggle to find jobs that pay enough to cover their monthly loan payments.Plans vary based on the type of federal loan, and only loans provided by the government are …show more content…
That means your monthly loan payments would initially be capped at $156.18. And since you have to update your financial information every year, the more you make the more you will pay.In July, the Obama administration announced plans to expand the most generous repayment plan, known as Pay as You Earn or PAYE, to anyone with an existing federal loan, regardless of their income. Right now, it's only people with especially low income relative to their debt and who took out their loans after 2007. PAYE caps borrowers' monthly bill to 10 percent of their income and forgives the debt after 20 years of payment. The Education Department expects to finalize the rule in late
Recent studies show that the number of individuals who default on their student loans has been steadily increasing as well. Statistics from the Institute for Higher Education Policy (IHEP) show that between 2004 and 2009 only 37% of federal student loan borrowers were able to make uninterrupted payments; it is an annual average of 7.4% (Cunningham, and Kienzl). According to IHEP, for every one borrower who defaulted, two ...
In recent years, there has been a tremendous increase in student enrollment in higher education after high school effecting the need for financial aid for all students. Education has become a growing part in America where more students want to better their lives with a college education. However, the cost of college tuition has increased and more students find themselves struggling to pay off the enormous tuition rates. In a recent study by the Consumer Financial Protection Bureau, student debt has reached $1 trillion in federal loan debt. Student loan debt has crippled the economy and students are struggling to pay off federal loans. In order to help students with the high tuition rates of college the government and universities offer
Many people would agree that our country’s young adults have and continue to incur a lifetime of debt by enrolling in college. It’s become an almost acceptable understanding that if you plan to attend college, you might as well expect to graduate with an enormous amount of debt. Robin Wilson, a reporter for the “Chronicle of Higher Education,” and author of “A Lifetime of Student Debt? Not Likely” suggests student loans are very real and can be life altering.
An education is one of the most important tools a person can acquire. It gives them the skills and abilities to obtain a job, earn a wage, and then use that wage to better their lives and the lives of their loved ones. However, due to the seemingly exponential increase in the costs of obtaining a college degree, students are either being driven away entirely from earning a degree or taking out student loans which cripple their financial prospects well after graduation. Without question, the increasing national student loan debt is one of the most pressing economic issues the United States is dealing with, as students who are debt ridden are not able to consume and invest in the economy. Therefore, many politicians and students are calling on the government to forgive their student loan debts so that through their spending the slowly recovering economy can finally return to its pre-2008 strength.
Doyle states in his article, “As of this writing, the total amount of outstanding student loan debt has been estimated at $960 billion (Kantrowitz, 2011).” Right now, there is only 7.4 billion people on earth, but not all of those people are in debt. So, massive debt with not near enough people to even cover the debt on the whole planet put this issue into perspective. Many people talk about applying for scholarships but scholarships can only cover so much of the price, and even then, the scholarships aren’t guaranteed. Now what about paying off the loans? How will that take? “First, incomes vary tremendously across different choices of majors and professions. Second, the incomes of individuals starting out in the labor market vary according to the state of the labor market at that time.” There are many different factors that go into this process. As stated in the previous paragraph, those who do both work and school are more apt to pay their debt off at a quicker pace. But, how much they make and how often they paid is another contributing factor. If the average college student is making minimum wage (part time) and is going to an in
Children of the twenty first century spend nearly 13 years in school, preparing for what is college, one of the only ways to achieve the so-called “American Dream”. College is the best way to start an advanced career and go further than one possibly could if college degrees were not available, allowing people to achieve their view of the American Dream; whether it be large houses, shiny cars, multiple kids, or financial comfort, college is the stepping stone to achieve the American Dream. But all great things come with a price, college dragging along debt. Students who attend college struggle to find ways to pay for it, leading to applying for student loans. These loans a great short term, paying for the schooling at the moment but eventually the money adds up
As of 2016, American students have accrued a massive 1.3 trillion in student loan debt. Just 10 years ago, the nation’s balance was only $447 billion (Clements). This ever-present cumulative burden has caused many post graduate Americans to delay important life events such as marriage, homeownership and children because of this substantial encumbrance (Clements). The debt will only continue to grow with neglect, so the most effective action to take would be eliminating the cost altogether.
Daniels Jr.’s editorial regarding college student debt, it is clearly stated that college student debt is known as one of the biggest financial burdens on adults in the world today. In fact, “After tripling in just ten years, college debt totals more than $1.3 million” (Daniels 2*). That is more money than credit card and auto loan debts combined. Daniels illustrates this fact with pathos, drawing out the seriousness of the situation and the effect on the national debt. A solution for college student debt is almost immediately introduced following the presentation of facts. Daniels introduces Income-Share Agreements, which is a program under which, “A student contracts to pay investors a fixed percentage of his or her earnings for an agreed number of years after graduation, offer a constructive addition to today’s government loan programs and perhaps the only option for students and families who have low credit ratings and extra financial need” (Daniels 2*). Here, Daniels approaches the situation by persuading his audience to understand the seriousness of the situation, and open their minds to this idea of controlling how debt is paid off so that the effects of it are not detrimental to the student. Daniels concludes his editorial with an emotional appeal, stating that without implementation of the ISA, student debts will continue to rise, thus hindering not only their life progression, but the progression of the country’s
There are some terms and conditions that the borrower will have to follow or it could cause them some financial problems. One way is to pay 10 years (120 payments) and you could qualify to have the remainder forgiven, but you have to be on a qualifying plan and you have to be working at a qualified place the entire time. You have to submit paperwork every year to prove your qualifications. This is one thing people forget because people just go on with their daily lives and forget it’s time to submit those papers again. There are other dangers too which include missing payments, and changing your job which can also disqualify you for receiving that
That is five thousand dollars more than previously. Five thousand in only four years, mind boggling. If a student wanted to pay off that amount in ten years, it would be $167.36 a month, versus in 2012 it would have been $116.05. Many students and their families live paycheck to paycheck, and they do not have that money to spare each month. The increase in price will hurt more than it would help.
Over the past decade, it has become evident to the students of the United States that in order to attain a well paying job they must seek a higher education. The higher education, usually a college or university, is practically required in order to succeed. To be able to attend these schools and receive a degree in a specific field it means money, and often a lot of it. For students, the need for a degree is strong, but the cost of going to college may stand in the way of a successful future. Each year the expense of college rises, resulting in the need for students to take out loans. Many students expect to immediately get a job after graduation, however, in more recent years the chances for college graduates to get a well paying job isn’t nearly as high as it used to be. Because students can no longer depend on getting a job fresh out of college, it has become harder to repay the loans. Without a steady income, these individuals have gone into debt and frequently default loans. If nothing is done to stop colleges and universities from increasing the cost of attending their school, the amount of time it takes for students to pay off their loans will become longer and longer. The extreme expenses to attend a college or university may leave a student in financial distress: which may ultimately lead to hardship in creating a living for them and affect the country’s economy.
Over the last few decades, college tuitions and fees have increased by over one thousand percent, surpassing every category associated with the cost of living including food and medical. This unprecedented rise in cost has resulted in an avalanche of issues for young and middle-age adults. As, a result of steep student loan amounts, graduates are being forced to move back with their parents, fewer young people are becoming homeowners, they are delaying retirement saving, and are dropping out of college at an alarming rate of nearly fifty percent. With all the controversy surrounding the topic of increasing college cost, the revised income-driven repayment program has been created to help borrowers pay back student loans according to their income.
With student debt at an all-time high, parents want loans to be a last resort when in need of money for their child’s college tuition. “Money is a major concern for many high school students (and their parents) who are weighing college options” (Austin). Debt is a serious matter and is a hard thing to pay back. Another controversy with college tuition is not every person gets to have the chance to attend college. With colleges having a monthly payment plan, there could be a possibility that more students would have the ability to experience college and more would graduate with less debt. Rather than the necessity of having the whole college tuition for that school year, students would b...
As people of many ages wish to further their education outside of high school, they tend to take out student loans in order to fulfill this wish since the large tuition payment is not in their budget. Paying for an education that presents a degree seems easy to many by taking out large loans to pay for their education. Recently, student loans have challenged the economy of Americans. Education is perceived as a necessary expense to many, in which they do not mind putting a burden on the economy for. Many people believe those loans can be paid off in a matter of a couple years. However, this idea is misguided as many people do not pay their student loans off until their early forties.
Anytime you hear about the national debt and its unimaginable sum, it is either on the campaign trail of a politician or in an economics class. Little does the debt get publicity on a normal basis, even though a majority of citizens believe it is a problem. A recent Pew survey found just slightly above half of Americans consider the budget deficit a top priority. So, to dive deeper into this issue, I will be discussing the creation of our national debt’s recent exponential growth, its ramifications, and possible solutions. How did the national debt grow so large?