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Education Debt – Keep an Eye on Student Loan Laws

lawschoolThere are quite a number of people who wish to obtain a college education, but their limited resources may easily hinder their ability to do so if not for the accessibility of student loans. Subsidized student loans have over time been availed by the government, but a number of non-government institutions have also provided the unsubsidized options. Some of the existing laws have however, been reviewed to make way for new ones, which will enable for the loans to be serviced and dispatched in a more effective manner. In essence, the new law will make it possible for students to go through their education using government rewarded loans, and then later repay them under better terms.

Laws Impacting Borrowers

1. The current law stipulates that people who take federal student loans and responsibly handle the repayments will have the balance forgiven after 25 years, but when the new law takes effect, students who get enrolled in or after 2014 will have their balances done away with in 20 years. In addition, those who will be successfully recruited in the public service sector will be forgiven after a period of 10 years, to ease their burden seeing as the workers in this sector receive significantly lower pay.

2. Students will also have the freedom to make payments that amount to only ten percent of their earnings. Individuals who will settle for this repayment option will put not more than 10% of their wages into settlement of the obtained loans –the current rates stand at 15% and the decrease is therefore pretty significant. Over a million persons will be eligible for this repayment plan.

3. If you intend to take out the student loans as a first-timer you should also be ready to deal with the limits that will be in place with regard to the amount you will be allowed to borrow. In the event that the loan will not be able to take you through to graduation, as a student, you will have to look for scholarships, unsubsidized loans or seek employment. This is a regulation designed to make more students graduate within a specific time.

Are the Student Loan Laws Beneficial?

The student loan policies will take effect in July, which means that anyone who obtains the loan before then will not be affected. The loans will also be provided based on the annual earnings of students’ families. The law that will go into operation will be aimed at decreasing the number of students eligible for such type of financial aid.

The limits on the loan borrowing will be put in place to help manage the debt amassed by college students in the course of their training. As a result, they will deal with lower payments once they start out on the loan settlement and this will significantly help ease the load.

Access to the subsidized loans will be restricted, but students will still be able to get hold of the unsubsidized loans regardless of their socioeconomic status. The policies will be of considerable benefit especially to the families with low income, since more of the students from such families will get to access the assistance they require.

As much as a college education is important, it cannot be meaningful if it plunges the borrower into financial ruin. This is something the government has taken note of and consequently worked to develop new law to make possible for the borrowers to handle the accumulated debts better. Considering the high cost incurred in catering for college education, getting financial aid is certainly a commendable cause, but it is important to be accountable in order to make the most of those resources.

About the Author:

Today’s guest article comes from Andrew Deen. He is a writer who creates informative articles relating to law. In this article he offers student loan advice and aims to encourage further study with a education law degree programs .

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