Student loans are the essential bridges that connect students to achieve their goals of quality education.  You can enroll in any course in college and your student loan will subsidize your expenses.  These student loans however, usually enslave students in paying their debts for the rest of their lives.  With the increasing interest rates and the absence of specific guidelines in minimizing the interests on student loans, graduates find themselves paying the student loan for a number of years, without any reprieve. This was why President Obama promulgated the Obama student loans.

President Obama said, “No one should go broke because they chose to go to college.”  He was referring to student loans, which give no amnesty to such debts.  In the previous set-up, nothing can excuse you from paying your student loan, except death.   When you fail to pay within the due date, the balance earns interest for the financer. This adds more to the financial burden of the student.

In the Obama student loans, the President wants to relieve students of their loans by offering a reprieve after 20 years of payment.   For graduates who choose to serve in public offices, debts would be forgiven after 10 years.  This would encourage new professionals to work for jobs in the service of the country.

He also has set the 10 % of income payment scheme in which the Obama student loans are paid based on the salary of the graduate when he finally lands a job. This scheme is reasonable and attainable, than setting a fixed rate that the person may not be able to pay on time, so the layers and layers of unpaid dues would earn extra interest rates and can suffocate the student.

The President also looked into tax credits and increased Pell grants.  This would accord respite to the payments of student loans.

Another factor that increases the interest rate of student loans is the bank subsidy. The banks act as intermediaries between the government and the students.   They earn interest from these student loans. In the Obama student loans, the bankers will be eliminated from the equation. This would definitely decrease the interest rates of student loans.

The Obama student loans offer many graduates the reprieve they badly need from the bonds of paying the high interest rates of their student loans. After all, students who graduate would become components of a strong and highly skilled working force of the country.

This entry was posted on March 25, 2010 at 11:09 pm. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Posted in the Obama Student Loans by Jane Comments Off