With the fall semester of 2010 coming up for many college students, recent changes to student loan programs are taking effect. One change has an income based upon repayment standard. This could help make it an easy loans for students with debt trying to make payments. New rules and formulas for student loans will, in the end, help make higher education more affordable for most.
Student loan rates dropping
July 1, the rates on a form of small loan subsidized by the government dropped. Rates for Stafford loans that were subsidized dropped from 5.6 percent to 4.5 percent. Subsidized loans that originated before July 1, 2010 will maintain the very same rate as before.
Changes to income based upon repayment
The changes to student loan programs that can have the biggest effect are all of the changes to income depending repayment formulas. Many recent graduates are discovering that with a tough job market and banks with no money to lend, it is practically extremely hard to make student loan payments. The program introduced last year is adjusted by the income based upon repayment recalculation. The point of income-based repayment is to keep debt manageable for all of the students who are saddled with huge loans and few job prospects.
Marriage penalty is then removed
For married couples who have two sets of student loans, the new income based upon repayment formula won’t penalize married couples. Combined loan payment amounts can be used to calculate eligibility as long as couples are going to file their taxes jointly. Only a single money loan balance could possibly be measured against total household income.
The current balance vs the repayment balance
Income based repayment used to be calculated using the amount borrowers owed when they first entered repayment. Now, income-based repayment calculations could be analyzed using the current sum that is owed. This will end up helping reduce the load on former students who have had loans in deferment, building interest without making payments.
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