Good News for Student Loan Holders

Whether you’re currently looking for money to pay for college or looking for ways to pay off your school loans, there is good news in a new federal law that will ease both burdens.

Kiplinger highlights the good news:

Better terms for repayment. The new law offers a more generous version of an existing program known as income-based repayment, which offers relief to borrowers whose student debt is high relative to their income. For those who take out federal student loans after July 1, 2014, the program caps monthly payments at 10% of discretionary income and forgives any remaining debt after 20 years. The current program caps repayments at 15% of discretionary income and forgives any balance after 25 years.

More money for Pell grants. This federal program for high-need students will receive a $36-billion infusion over the next ten years, bringing the maximum annual grant per student to an estimated $5,975, up from the current maximum (in 2010) of $5,550. The money will sustain the chronically underfunded program but won’t make much of a dent in the cost for students who attend four-year institutions. The total annual tab for in-state students at public institutions runs an average of $15,213, according to the College Board. The annual average cost of a private institution approaches $36,000.

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