There has been a lot of buzz lately about the possibility of student loan forgiveness but it is really nothing more than a rumor. It is one of the things the protestors of Occupy Wall Street want but the reality is that it is very unlikely to ever happen.
Today though, President Obama did outline some new guidelines that should make every college student happy and make paying their loans back a bit easier. His plan was supposed to begin in 2014 but due to the deteriorating economy and the dire need for help, students deserve this break sooner than later he said.
1) Starting in 2012 Obama’s plan will lower the student loan maximum payment from 15% to 10% of discretionary annual income. Another important change is that unpaid debt will be forgiven after 20 years instead of the 25 years that is currently on the books. These changes will make things financially easier on students who are struggling to pay off loans.
2) Also meant to financially aid students will be the new ability to consolidate loans from the Federal Family Education Load Program and any direct government loans into one loan. This will enable students who have both of these kinds of loans to get a lower overall interest rate, maybe as much as half a point better than before. Affecting millions of students who have loans, these new measures are meant to make college more affordable at a time when most everyone needs relief.
Of course none of this is going to help anyone get a job and that is also on the mind of most college students and recent graduates. College student jobs are in high demand and a very stressful subject for most young people. The American dream of going to college and graduating to find a good solid job waiting for them seems to be a dream of the past. With Unemployment rates approaching 10% and no indication that things are going to get better, today’s college students are in a very bad financial position, especially with the exorbitant tuition prices we now see everywhere.
It is also very possible that President Obama, by having these measures start in 2012 instead of 2014, is hoping to get more votes from students and younger people who might benefit from them. It is well known that he won his presidency with wide support from college students in 2008 and he surely wants that vote again next year.
Will these new student loan relief measures put forth today make you more likely to vote for Obama in 2012?