Recently there has been a lot of discussion in the media regarding student loans brought up by the Occupy Wall Street protests that have spread to major cities across the U.S. OWS has brought many issues to light, mainly in the realm of finance reform, that deserve discussion. Most recently, OWS protestors have suggested additional reform is needed in higher education finance. It is worth noting that many reforms have already taken place in recent years. One of the most notable changes occurred in 2010 with the passage of the Health Care and Education Reconciliation Act. Under this legislation, all private lenders were barred from making any federal student loan. Currently, all federal student loans are made by the Department of Education. Many of the large banking firms that are at the epicenter of the OWS movement, have already been regulated out of the business of making student loans. A student can fund the entirety of their graduate education employing only loans from the federal government and should never have to go to a bank.
Additionally, in 2007, the College Cost Reduction Act established the Income-Based Repayment and Public Service Loan Forgiveness programs. These two programs provide that virtually no student should default on their federal student loans, even if they have NO income at all! In fact, many students should expect a substantial portion of their federal student loan debt forgiven. These two programs have been strengthened by the President’s recently announced Pay-as-your-Earn program. Financing a graduate education can be daunting, but great resources exist to make it very manageable. With these programs in place, the prospect of having extreme hardship in repaying federal student loans, regardless of your current income level, is in decline.
By: Michael Light, Director of Financial Aid