The class of 2011 is expected to graduate with record massive student debt of $1 trillion. Clearly, the student debt scenario in this country has gotten out of control, and California personal bankruptcy lawyers are pleased to see that the Obama administration has finally announced proposals to deal with this crisis.
Under the president's plan to ease student loans, some student borrowers will be able limit their monthly loan repayments to 10% of their discretionary income. This will likely begin from next year onwards. The plan covers an estimated 1.6 million borrowers. However, persons who choose a low monthly repayment plan must understand that this also means a longer repayment term.
Another part of the plan that California bankruptcy attorneys find particularly encouraging is that the remainder of the loan may be forgiven after twenty years of repayment. Currently, persons may have their loans forgiven after twenty-five years. Persons in some jobs like nonprofits could even have loans forgiven after ten years.
President Obama's plan will also allow borrowers to consolidate loans through the Direct Loan Program. This will allow them to get an interest reduction of .25% on the Federal Family Education Loans, as well as another .25% savings on interest on the consolidated balance.
The plan will also allow students to compare and review loan packages before they make a decision. Further, under the President’s plan to tackle student debt and encourage entrepreneurship, Gen Y Capital Partners will meet the monthly student loan payments of entrepreneurs, who have entered a federal loan repayment program and started a new business.
Student debt in this country has already reached crisis proportions, not just because of rising tuition fees, but also because students now graduate with massive amounts of debt, but few employment prospects. In the current economic situation, it would be suicidal to ignore this problem until it balloons to critical levels.
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