Meanwhile, there are about 8 million Americans currently in default on their federal student loans, according to the Department of Education. They can refinance with a private lender — but only if they qualify, usually by showing high payday loan same day Kentucky income and good credit. Clinton’s plan would likely allow them to refinance with the federal government.
It could make loan payments more manageable, but the effect is small, wrote Susan Dynarski, a professor of economics, public policy and education at the University of Michigan.
Cutting the interest rate by about 2% on a $20,000 loan for example, only reduces the monthly payment by $20 if the borrower is paying it off in 10 years, according to her paper.
The U.S. does offer income-based repayment plans for those who apply, but it’s not available to everyone. Payments are set at 10% of disposable income from the previous year, which could hurt those borrowers who don’t have steady pay. It also requires the borrower to opt-in by reapplying annually, or every time their income changes, in order to adjust the loan payment.
Some other countries, like England and Australia, have made the income-based program automatic. Payments are taken directly out of your paycheck (like taxes), and automatically adjust if your income changes.
Your child got into the college of their dreams. But the acceptance letter didn’t mention any kind of scholarship. Now what?
The good news is that most students receive some financial help paying for college, bringing the cost down from the school’s “sticker price.”
At the average private college, for example, the sticker price for tuition, room and board was $45,370 last year. Continue reading “2. Ask the college for more money”