A $23,000 loan might not cover the sticker price for many new cars, but this is what the average student is said to pay to invest in an education through traditional or online college. Recent changes in the federal government’s student loan program allow those who obtain online degrees to pay lower installments on these loans over a shorter period of time than they have been.
President Barack Obama called the changes, which apply outside of the online degree realm as well, “one of the most significant investments in higher education since the G.I. Bill”, according to the New York Times blog, The Caucus.
The changes reportedly go into effect for loans issued in 2014 and afterward. Obama made them official when he signed the Health Care and Education Affordability Reconciliation Act of 2010 into law in late March. The changes end federal government subsidized and guaranteed student loans provided by banks and private lenders, reportedly saving some $61 billion over the course of 10 years. Among the beneficiaries: Students who receive “direct” loans that typically don’t involve credit checks or collateral, and that generally don’t have to be repaid until after graduation.
“To make sure our students don’t go broke just because they chose to go to college, we’re making it easier for graduates to afford their student loan payments”, Obama was quoted in the Associated Press report as saying. “By the end of this decade, we will once again have the highest proportion of college graduates.”
The United States currently holds the #14 slot in terms of college graduates worldwide. President Obama wants the country to rise to what is presently South Korea’s top position, according to a CBS News report. To help make college online and otherwise more affordable, the federal government each year provides students with grants, loans and work study program offerings. More and more students are said to be enrolling in college, online college offerings make college more accessible and online degree programs are offering a greater variety of choices. Many students, as a result of the economy, are also said to be seeking tuition assistance.
The government’s direct loans are known as Stafford and Perkins loans. Some 1,800 participating colleges and universities award these loans to students for traditional and online college pursuits. The Perkins loan, with 5 percent interest rates paid by the government while students attend college at least part time, is provided based on financial needs that are determined in part on individual or parental income and assets. Stafford loans are reportedly available at interest rates as low as 5.6 percent or less. For students who have financial needs, Stafford loans can be “subsidized” so that the government covers the interest for as long as they’re in school on at least a half-time basis.
Where direct loan recipients have had to devote 15 percent of their income to payments, those who receive loans after mid-2014 need only dedicate 10 percent to those payments. Loans can reportedly be forgiven after 20 years or less, rather than as many as 25 years, in instances where students make timely payments.
The college loans changes are to also benefit federal grant recipients and community colleges, as well as schools online. Savings are to be passed on to community colleges to help pay for education and career training programs and to expand federal Pell grants that qualifying students with financial needs don’t have to repay. If you are interested in getting more information about free scholarships and grants, check on the internet.