News about high student loan debt has been receiving a lot of attention recently. That should be unsurprising, considering the difficulty with which many New Jersey residents are having in paying off their student loans. Fortunately, some amount of debt relief is on the way from the federal government.
Recently, President Barack Obama announced a plan that could bring relief to millions of student loan recipients. Beginning in 2012, the plan allows for payments of federal student loans to be capped at 10 percent of annual income. If the loan is not fully paid off after 20 years of repayment, the remaining balance will be forgiven.
The president’s plan could provide relief for up to 1.6 million borrowers. Fewer than 500,000 Americans use the program in its current form. Because the plan is being issued by executive order, there are no worries about Congress possibly delaying the program.
No doubt, the plan will be welcomed by many New Jersey residents. Due to downturns in the economy, many people are having trouble meeting their financial obligations. The new student loan repayment program should provide a tremendous amount of assistance to those people seeking debt relief.
It should be noted that this plan does not apply to student loans from private lenders. Additionally, those facing a high burden of debt due to not only student loans but also to credit card bills and mortgage payments may well benefit from the assistance of an experienced attorney. The attorney may be able to aid in helping borrowers to fashion a repayment plan that allows for manageable monthly payments. In some cases, personal bankruptcy may be an option. Bankruptcy is a chance to start fresh financially by going through a court process that allows the debtor to discharge most forms of debt.
Source: Reuters, “Obama tells students of plans to ease loan burden,” Ian Simpson and Jerry Norton, Oct. 26, 2011