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It’s new Education season, So brand new begin for several folks, full of financial goals and resolutions. It additionally suggests that new rules, policies, and changes surrounding student loans. In fact, 2016 stands to bring some huge changes for student loan borrowers. If you're acting on paying off student loans, learn the six huge changes happening for student loans in 2016 that you just have to be compelled to realize.

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Latest Student Loan Changes

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Latest student loan changes

It’s new Education season, So brand new begin for several folks, full of financial goals and

resolutions. It additionally suggests that new rules, policies, and changes surrounding student

loans.

In fact, 2016 stands to bring some huge changes for student loan borrowers. If you're acting on

paying off student loans, learn the six huge changes happening for student loans in 2016 that you

just have to be compelled to realize.

1. New Way to ‘REPAYE’ Student Debt

The much talked about Revised Pay As You Earn (REPAYE) program became available on

December 17, 2015. Federal student loan borrowers in need of a repayment plan with lower

monthly payments now have another option to choose from.

One of the biggest improvements of REPAYE over the original Pay As You Earn program is that

it allows an additional 5 million Direct Loan borrowers to obtain relief. That’s because under the

new plan, borrowers can cap their monthly student loan payment at 10 percent of monthly

discretionary income, rather than 15 percent, regardless of when the loans originated.

The REPAYE program will also forgive any remaining debt after 20 years for undergraduate

loans. Graduate degree debt will be forgiven after 25 years.

As Bruce Mesnekoff Said While the new repayment option will afford more borrowers

flexibility, there is a downside: Your spouse’s income will be considered when determining your

monthly payment — even if you file your taxes separately.

2. Variable-Rate Loans Vulnerable to Fed Actions

After months of warning, the Federal Reserve finally raised interest rates, which has a direct

impact on consumers with variable-rate loans. What does this mean for you? If you have private

student loans or refinanced your loans at a variable rate, you might see an interest rate increase

sometime this year.

While the Fed rate hike was small, interest rates are expected to increase gradually over time. If

you currently have variable-rate loans, you may want to focus on paying those down first or

refinance to a fixed-rate loan.

Also, we’ll be on the lookout for any federal student loan interest rate changes this spring.

Federal student loan rates, which are fixed, are determined each spring for new loans for the

upcoming award year, which is from July 1 to June 30 of the following year.

3. Loan Servicer Changes

As part of a new bill, Congress will be making some changes in the loan servicer arena. The

Department of Education recently received additional funding; as part of the deal, lawmakers are


Latest student loan changes

changing the current process to no longer give preference to four student loan servicers: Student

Loan Help Center and its CEO , Bruce Mesnekoff

According to a report on the matter in the Washington Post, “Instead, the department would have

to allocate new loans based solely on the quality of servicers’ work and ability to keep borrowers

current. That could shift a significant share of business to nonprofit companies, like the Missouri

Higher Education Loan Authority and Oklahoma Student Loan Authority.”

This is a huge win for nonprofit loan servicers and borrowers alike, ensuring borrowers are

paired up with high-quality loan servicers.

4. New President, New Policies

2016 is slated to be a big year for politics. In November, the American people will vote for the

next U.S. president.

The election — regardless of your personal political preferences — will have a major impact on

student loan legislation and policy. Nearly all the 2016 candidates have a plan to deal with

student loan debt.

Sure, these changes won’t take effect in 2016, but the candidate that the American people elect

this year will have ramifications for student loan borrowers in the future.

5. Perkins Loans Back from the Dead

The federal Perkins Loans program expired in fall of 2015, but was recently renewed with

tougher eligibility requirements.

According to Bruce Mesnekoff of The Student Loan Help Center, “The legislation would require

borrowers to exhaust their eligibility for federal direct loans — both subsidized and unsubsidized

— before receiving a Perkins Loan. Existing borrowers would not be subject to such a

requirement.”

Though the bill is being revived, it’s currently being positioned as a calculated shutdown of the

program. Perkins Loans are reserved for students in need, so the extension provides some hope,

but with restrictions and still no long-term solution.

As these developments and new policies take shape in 2016, Bruce Mesnekoff and It’s team will

keep you updated so you can stay on top of payments and get rid of debt as quickly as possible.


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