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Student loan repayment may get easier for some

Many people around the country have been clamoring for relief on student loan debt. Along with credit cards, student loans are the other giant standing in the way of paying off debt and starting to rebuild your credit.

Well over half of the students that graduate from college with a bachelor's degree have student loans. The amount that each person owes on these loans can vary, but the average is $24,000 according to the Project on Student Debt.

As most current and former students would probably agree, the ideal circumstances for paying off student loans would involve securing a well-paying job and whittling away at debt. But that trend is becoming harder to come by with the ailing economy of the United States. Instead, many can't pay the minimum payments and receive additional penalty fees and interest, which hurts your credit and only pushes people further into debt.

However, President Barack Obama has provided many student loan debtors an extra hand in this battle.

With new legislation, students can consolidate Federal Family Education Loans and Direct Loans and receive a small decrease in the interest rate. The interest rate decrease could only go down by up to 0.5 percent. But even though the interest relief is small, it is a smart move to help keep a borrower's loans in order.

The more high-profile facet of the new plan is the expanded version of 2009 income-based repayment program. Those that qualify could see their loan payments capped at 15 percent of their discretionary income. And, after making payments for 25 years, the remaining balance will be forgiven.

Keep in mind, this is only for those receiving federal student loans that are issued after 2012. Those who received student loans earlier would not qualify.

Source: USA Today, "Taking advantage of new student loan assistance," Sandra Block, Oct. 31, 2011

1 Comment

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