The United States Department of Education offers loans to college students as part of an initiative to increase access to a college education to students at all levels. Basically, no matter your income—or ability—students loans are designed to help all students receive a college education.
Of course, as any borrower probably knows, it is not necessarily the thought that counts, in this case. While students loans are not too hard to obtain, paying them back is not always easy. For one, there is no guarantee of a job upon graduation; and without a job there is no way to pay them back. Secondly, repaying loans—particularly in this highly technological and mobile world—is inconvenient; while everybody probably respect the responsibility to do such, nobody is particularly enthusiastic about it.
But the Obama Administration announced, on Wednesday of this week, a new initiative to enroll another 2 million federal student loan borrowers in an income-based programs over the next year. Approximately 4.8 million federal borrowers are already using income-based repayment programs, so the initiative will bring the new number closer to a total of 7 million. The Pay As You Earn program caps monthly student loan payments to only 10 percent of their income (graduates can opt to pay more, of course).
Officials have also announced they plan to reform—and, more importantly, standardize-how federal student loan servicing organizations give information to credit reporting agencies.
And with that in mind, the US Department of Education has also launched a new website aimed at helping people who have student loans to help them find a repayment option best suited to their individual needs.
Education Secretary John King understands the complications facing many college graduates. At a recent press conference he advises that he is also still paying off his college loans, so he knows—first hand—how daunting the responsibility can be. Still, he reminds that this is “debt that pays you back.” He is also quick to assure that the Department understands the cost of college is rising quickly and likely at a rate many Americans cannot accommodate.
As an experience loan payer, and a government official, he also advises that an income-driven repayment plan only best serves some of the population. He advises all borrowers closely examine all of the options to find the one that best suits their individual needs.