New Rules Lower Payments For Financial Aid!

Mon, 07 Jun 2010 23:38:51 EST

A new car can easily cost more than $23,000 - the amount the average student is said to invest in the future by participating in programs at on-campus and online college locations. Student loans can help put online degrees within reach.

And thanks to recent changes, students who pay for online degree pursuits with federal government loans can expect to pay lower installments and potentially see the debt disappear after a shorter period of time than regulations have previously allowed.

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 an 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 is ranked at #14 worldwide in terms of college graduates, and Obama reportedly wants the country to take over the #1 position that South Korea currently enjoys, CBS News has reported.

The federal government each year provides students with grants, loans and work study program offerings that can make college online and otherwise more affordable. An increasing number of students are reportedly enrolling in college, and online college opportunities with a growing choice of online degree programs allow many to fit higher education into already busy schedules. As a result of the economy, many more students are said to also be seeking tuition assistance.

Participating colleges and universities - some 1,800 in all - award students the government's direct Stafford and Perkins loans. The financial need-based Perkins loan, with 5 percent interest rate, is awarded in part based on income and assets, and the government pays the interest while students are in college online at least half-time. Stafford loans are reportedly available at interest rates as low as 5.6 percent and less. For students with financial needs, Stafford loans can be "subsidized", in that interest doesn't accrue while students are enrolled in college online at least half time.

Students have traditionally been required to devote 15 percent of their income to repaying direct loans, according to reports. When the changes take effect in 2014, reports noted, students have to only dedicate 10 percent of their income to the payments. Students who pay their loans on time might see the loans forgiven after 20 years or less instead of as many as 25 years, according to reports.

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New Rules Lower Payments For Financial Aid!