As a college student, I am interested in this “old” student loan payback plan that President Obama has recently announced.
At first I thought it is about time that some focus is put onto higher education. That was until I realized he is only trying to help with the payback of student loans.
I am a fortunate college student whose parents saved money for me to attend school. In which I am grateful for, but money will run out sometime due to increasing prices in tuition. I don’t think my parents planned on saving to pay in upwards of $300 a credit hour. My sister who was here three years before me hardly saw $200 a credit hour.
In doing a little more research with the “Income-Based Repayment” plan this will only allow more time for students to pay off loans with lower monthly payments. There are stipulations of how much income is coming in compared to the amount of loans owed. The more money you make the higher the monthly payment for loans. This doesn’t seem to be such a great plan.
The plan definitely is targeting the needy, such as a family that makes only $30,000 but has loans that are over $40,000. It can be tough in this economic time and I am trying not to be bitter. It is just frustrating that many people do get help but it is the middle-income families that struggle because they are just above “low income.”
There is such a fine line to be labeled “low income” that the plan can be too vague for people to understand who can be accepted. One feature that many will never be able to receive is the loan forgiveness after 25 years. All money still owed is forgiven after 25 years, yet my parents started saving for my college that long ago and will never see a penny of help.
Even the participants in the plan will never see this benefit because most people will see pay increase, which will increase monthly payment and a faster loan payoff so very few will reach this benefit.
In reading the Washington Post there are more than 36 million Americans with federal loans but only 450,00 participate in this repayment plan. That is a measly amount compared to who could be helped.
So some people can benefit with the debt forgiveness but will still have over two decades of loans. How will families ever be able to save for their children’s education? Oh, that’s right, they probably won’t be able to afford college so it will be a generational struggle for people to attend college.
The plan seems to be such a big deal and awesome opportunity, but why can’t the Department of Education focus on matters that will affect a larger group?
Why not try to find a way to lower the cost of tuition so loans aren’t such a hassle in the end?