New laws could bring choices for loans, aid
Daily Northwestern, Northwestern U.
October 13, 2009
Aaron Beswick, a SESP senior graduating this winter, barely has time to celebrate his graduation before he has to worry about repaying $32,000 in student loans.
But new federal government initiatives plan to ease burdens like Beswick’s with direct loans in which students borrow money straight from the government rather than bank lenders. The Income Based Repayment Plan allows for monthly payments based on a family’s individual income. Students eligible for this plan include those whose loan debt is high in relation to family income and size, and who participate in the Federal Family Education Loan or the Direct Loan, according to the Federal Student Aid Web site.
For students like Beswick, who plans to be a social worker, the program can provide benefits with its 10-year public service loan forgiveness. In this area of Income Based Repayment, a student who works in public service for 10 years may have his or her loan canceled if all monthly payments are made.
“It sounds like a wonderful and beautiful option,” Beswick said. “The one thing that makes it sound scary is not missing a payment. I’m not sure that the work I want to do is well-paying.”
Brian Drabik, associate director of Northwestern’s undergraduate financial aid office, wrote in an e-mail that students should only apply for the Income Based Repayment Plan when encountering problems with payment because paying loans faster doesn’t acquire as much interest.
The federal government is in the process of passing direct-lending legislation, which may remove private banks from federal lending programs. The House of Representatives has passed this legislation, and universities including NU are waiting for the Senate decision.
And when will the cost of a postsecondary education become reasonable- or at least rise only with the annual COL in this country...?