More Students Turn to Loan Forgiveness Programs

Wednesday, 06 Aug 2014 06:52 AM

By Elliot Jager

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The number of student borrowers taking advantage of income-based repayment plans for college loans has doubled in one year, The Daily Caller reported.

The Income-Based Repayment and Pay As You Earn plans were established by the government to enable borrowers to pay off their tuition loans based on how much they earn and to qualify for loan forgiveness after a minimum of a decade, according to a report by the New America Foundation.

Both programs have grown because college tuition rates have far outpaced job expansion and the kinds of salaries that would make it possible for students to repay loans on their own. More people are also turning to the programs because the Obama administration has been promoting them.

Some 1.9 million Americans, about 10.5 percent of student borrowers, are enrolled in one of the programs. That's up from 950,000 participants last year, the New America Foundation report said.

"In the 3rd quarter of 2013, 14.4 percent of the Department of Education's Direct Loan portfolio was involved in Income-Based Repayment or Pay As You Earn. Now, that total has risen to 21.8 percent, representing over $100 billion," The Daily Caller's Blake Neff wrote.

The Income-Based Repayment plan is for loans taken before 2007. It caps payments at 15 percent of an earner's discretionary income with the balance forgiven after 25 years. The newer Pay As You Earn program sets payments at 10 percent of discretionary income and offers loan forgiveness at around 20 years – though less for employees in the public sector.

Some 15 percent of student loan borrowers go into outright default within several years of leaving school and are not eligible for these programs.

Even graduates earning good salaries in law and medicine are turning to the repayment programs because their tuition bills are high relative to their salaries.

Florida Republican Sen. Marco Rubio and Virginia Democratic Sen. Mark Warner have proposed legislation intended to keep students from taking out unmanageable loans. Their plan would forgive loans under $57,500 after 20 years, the Caller reported.

Related Stories:


© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Buffalo Residents Urged to Prepare for Flooding

Sunday, 23 Nov 2014 08:58 AM

Buffalo is making significant progress clearing streets still clogged from an epic storm left more than 7 feet of snow e . . .

Obama, Jeter Tee off on Exclusive Vegas Course

Sunday, 23 Nov 2014 07:47 AM

President Barack Obama is playing golf at an exclusive Las Vegas-area course with a retired shortstop, a Democratic Part . . .

Shifting Attitudes at Play in Cosby Allegations

Sunday, 23 Nov 2014 07:10 AM

Tamra Wade struggled mightily over whether to go to the police more than a decade ago, when, she says, a trusted profess . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved