The emergence of the Student Loan Forgiveness Act is has provided a beacon of light for Americans crumbling financially under the strain of college loans. High interest rates and outrageous balances are the reason President Obama signed a new federal bill releasing students from their loan debts.
As President Obama said “Any student, past or present, who has taken loans from the federal government within the last 10 years to pay for higher education, will no longer be required to pay back those loans. This forgiveness also is to be extended to any student currently enrolled in college, who may need financial assistance for the next several years as they finish their degrees.”
This marks a crucial turning point in obtaining higher education. With Obama’s views on education as being the pillar of a great nation, prospective students may see even more balanced educational opportunities in the future. As of now, students are forced year-after-year to leave school because of the insurmountable costs of a higher education. Almost every student enrolled in a college program relies on some kind of aid with the U.S. government.
The forgiveness of student loans will not begin until the end of 2016, at which point students will begin to witness their interest and repayments amount decrease automatically, eventually with everyone at a complete zero-dollar balance.
On the downside, private companies like Sallie Mae, still carry the sky-rocketing high interest rates and inflexible repayment schedules. This company has made it publicly known they are not interested in following suit with the government. In a statement to the news, Carla Edwarton, a CEO of Sallie Mae stated “Education is important to us, but paying back your loans are what we care about. We aren’t loan sharks, we aren’t going to break your kneecaps if you don’t pay, as much as we would like to…[But] you can bet we love making all that sweet, sweet high-interest rate cash.” Sallie Mae makes over $1 billion a year in collections.
With all the student loan debt crippling the nation, it is a viable solution that the private loan companies will have to fall into new regulations and cap their interest to make it reasonable for loan repayments. Obama’s views on education should be enough to put pressure on any student loan companies to amend their policies.
“Education is the single most important thing in my mind when it comes to furthering this great nation.” said Obama. “I can think of no better way to help the young people, this next generation of thinkers and doers, than by helping them to stand on their feet more firmly, and to give them some hope that they can and will receive their degrees, and they can work towards a future for themselves and their families, and not just a future of paying back debt.”
In the coming months, borrowers who are currently making student loan payments or have defaulted can expect to receive a packet letter. This letter will outline how their assistance loans will be forgiven and what percentage of loan is forgiven. If any balance is left, it will be owed to private companies.
Students who are currently making payments or have defaulted on their loans can expect to receive a packet letter within the next 3 to 4 months detailing how their assistance loans will be forgiven and what percentage, if any, will be left owed to private companies and firms.
If Obama continues to amend and correct the student loan problem, the future looks promising for those who simply want a higher education. With other countries offering free education, it is only natural Americans would look on and wonder why it is not happening here.
Changes in Student Loan Repayment Assistance Act of 2015
Other changes in Obama’s radical student loan system come with the bill H.R.1713 which will amend the Internal Revenue Code to exclude gross income of an employee. In the Student Loan Repayment Assistance Act of 2015, participating employees will have to pay at least $50 per month on their student loans (in addition to the amount excluded from their gross income). This is part of agreement within an employer student loan payment assistance program. A written plan is also submitted by employer. The employee will be able to take an income tax deduction in an amount equal to the employer’s matched contribution. The maximum amount is $6,000 in a taxable year and $50,000 over a lifetime.