Student loan debt has reached an all time high of $1.2 trillion USD. It’s the second largest form of household debt among consumers after mortgages. It’s been a topic of concern within the academic and political arenas, with numerous policy attempts at easing the financial burden for students and the nation’s economy.
Much legislation has been proposed recently in an effort to help student loan borrowers manage increasing levels of debt. But the question remains: which borrowers benefit from student loan reform? Do regulations pertaining student loan debt help all borrowers, or only certain demographics?
On June 9, 2014 President Obama issued a presidential memorandum explaining the expansion of the “Pay as You Earn” (PAYE) alternative student loan repayment program. This new policy change signals the severity of the student loan situation for both the government and borrowers who struggle to payoff their education debts.
So, what are the actual changes to PAYE?
Pay As You Earn isn’t a new program and enrollment in 2013 grew almost 40 percent, making the total number of borrowers currently enrolled around 1.6 million. The PAYE expansion proposed by the Obama administration would extend eligibility to student loans that were granted before October 2007, along with including borrowers who ceased taking student loans before October of 2011.
Several million student loan borrowers have already taken advantage of other Income Driven Repayment programs that also limit monthly payments based on 10-20% of a borrower’s income, such as IBR and ICR. Another benefit under the PAYE repayment plan is that any remaining student debt after 20 years can be forgiven (keep in mind, forgiven debt will be treated by the IRS as taxable income).
The Growing Student Loan Problem
The number of student loan delinquencies continues to rise. The expansion of repayment programs helps to simplify the complexities of student loan repayment for borrowers. Those who are have a significant discrepancy between their monthly earnings and their student loan payments will benefit most from the qualification requirements of the proposed expansion.
For borrowers who are financially stable and able to make monthly payments, qualifying for Income Driven Repayment programs may be more difficult. If you’re unsure if you qualify for income driven repayment programs, you can simply apply online to find out if your eligible.
Do You Qualify for PAYE (Pay As You Earn)?
If you qualify, your payments will be determined as a percentage of discretionary income, which is calculated as any income earned above 150% of the poverty line. Borrowers who enroll in the IBR program will have a lower monthly payment under the new revisions.
If you’re not in good standing with respect to your student loan, due to delinquency or default, you will not be eligible for the expanded repayment programs until you rehabilitate your student loan.
Legislative proposals to help those under the weight of high student loan debt only underscores how important of an issue this is. As more students continue to receive financial aid in the form of private and federal student loans, the problem seems likely to get worse before it gets better.
Whether you’re experiencing difficulty in addressing your own student loan debt or are curious about
refinancing your student loans to optimize your repayment, it’s a good idea to consult with a student loan expert regarding your options. You’ll be fully informed on all of the options that are available to you, while making sure that the government has your best financial interest in mind.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|