Post by caseagainstfaith on Oct 25, 2011 13:56:09 GMT -5
LOS ANGELES—President Barack Obama will announce a plan to allow people holding both private and government loans to consolidate their debts into one government loan, thereby reducing their interest rates, officials inside and outside the administration said Tuesday.
Mr. Obama is to announce the move in Denver on Wednesday, part of a White House push to emphasize actions his administration can take to boost the economy without congressional approval. Education Secretary Arne Duncan and White House Domestic Policy Council Director Melody Barnes were scheduled to discuss the proposal later Tuesday.
The change could affect an estimated 5.8 million people who hold two types of student loans—government-backed loans issued by the private sector under the Federal Family Education Loan program and "direct loans" issued by the government, an administration official said. Consolidating the loans would result in lower interest rates and reduced monthly payments, as well as additional loan-forgiveness and repayment options.
The president also will announce an acceleration of an income-based repayment program. Existing rules allow graduates to limit their loan payments to 15% of their income, with all debt forgiven after 25 years of payments. Congress already has passed a change to that program that would allow borrowers in 2014 to pay 10% of their income, with all loans forgiven after 20 years. On Wednesday, Mr. Obama will announce that he is speeding up this program so it will affect students beginning next year instead of in 2014.
Neither change requires congressional approval, the official said.
Banks, credit unions and lenders could be affected by the president's plan in different ways. While some lenders might welcome having a loan paid off and taken off their books, other companies might not want to lose their assets. Shares of SLM Corp., parent of student lender Sallie Mae, were down 11% in afternoon trading on the New York Stock Exchange following reports of the Obama announcement. Shares of education-finance company Nelnet Inc. fell 5.6%.
Mr. Obama is to announce the move in Denver on Wednesday, part of a White House push to emphasize actions his administration can take to boost the economy without congressional approval. Education Secretary Arne Duncan and White House Domestic Policy Council Director Melody Barnes were scheduled to discuss the proposal later Tuesday.
The change could affect an estimated 5.8 million people who hold two types of student loans—government-backed loans issued by the private sector under the Federal Family Education Loan program and "direct loans" issued by the government, an administration official said. Consolidating the loans would result in lower interest rates and reduced monthly payments, as well as additional loan-forgiveness and repayment options.
The president also will announce an acceleration of an income-based repayment program. Existing rules allow graduates to limit their loan payments to 15% of their income, with all debt forgiven after 25 years of payments. Congress already has passed a change to that program that would allow borrowers in 2014 to pay 10% of their income, with all loans forgiven after 20 years. On Wednesday, Mr. Obama will announce that he is speeding up this program so it will affect students beginning next year instead of in 2014.
Neither change requires congressional approval, the official said.
Banks, credit unions and lenders could be affected by the president's plan in different ways. While some lenders might welcome having a loan paid off and taken off their books, other companies might not want to lose their assets. Shares of SLM Corp., parent of student lender Sallie Mae, were down 11% in afternoon trading on the New York Stock Exchange following reports of the Obama announcement. Shares of education-finance company Nelnet Inc. fell 5.6%.
source - online.wsj.com/article/SB10001424052970204644504576653043088346786.html
Well it isn't much but at least that should help people like me who are victims of sallie mae's wrath to see a tiny light at the end of the tunnel. I don't see how it could be worse than my current predicament.
