Student Loan Blog : Loan Forgiveness

Tufts University to Help Graduates in Public-Service Repay Student Loans

Student Loan Girl — Thu, 24 Apr 2008 17:31:00 GMT

Under a new student loan repayment program offered by Tufts University, graduates and undergraduates from the school who pursue jobs in public service could have a portion of their student loans forgiven.

Tufts alumni from any graduating class who choose or have chosen to work for a nonprofit or public-sector employer following graduation may be eligible for the program, according to an article by The Chronicle of Higher Education writer Elizabeth Farrell (“Tufts Offers Loan Relief to Public-Service-Minded Students and Alumni,” April 23, 2008).

Tufts officials tout the university-wide program as the nation’s first debt relief plan to include all students who graduate from a particular school, Farrell wrote.

The total loan-repayment-assistance award a Tufts graduate could receive through the program is dependent on the graduate’s income level and the remaining balance of his or her student loan debt.

University officials expect to grant the school’s first loan-forgiveness awards in December. Initial funding for the program includes a $100 million gift from Tufts graduate, and eBay founder, Pierre Omidyar and $500,000 from the Omidyar-Tufts Microfinance Fund.

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Kentucky Lender Puts Brakes on Student Loans to New Borrowers

Student Loan Girl — Mon, 21 Apr 2008 21:50:00 GMT

Citing ongoing fallout from the national capital market crisis, Kentucky officials announced the state’s student loan agency will stop making student loans to first-time borrowers beginning May 1 until it can secure additional financing, according to an article by Nancy C. Rodriguez in the The Courier-Journal (“State to Suspend Student Loans to First-Time Borrowers,” April 18, 2008).

The Kentucky Higher Education Student Loan Corp., also known as The Student Loan People, will continue to make student loans for its returning borrowers based on the availability of funds.

In the meantime, the student loan company has asked the U.S. Treasury to allow the Federal Financing Bank to temporarily help the state fund new student loans until confidence in the market is restored.

A few months ago, the state also announced it would be phasing out three loan-forgiveness programs for health care, education, and public prosecutors due to federal cutbacks and overall market instability.

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Curbing “Brain Drain”: Will Forgivable Loans Keep Students In-State?

Student Loan Girl — Fri, 06 Jul 2007 01:12:00 GMT

To address the concern that state universities are not retaining the best in-state students and professors, legislators are discussing ways to prevent this “brain drain,” including student loan forgiveness programs for college graduates who pledge to work in their home state after graduation. Several states are “considering ambitious plans focused on what happens to students after they graduate and whether states could find ways to keep their graduates from flocking to New York City or Boston or the Silicon Valley like so many before them,” according to a recent article by Scott Jaschik (“Holding on to Graduates,” Inside Higher Ed, July 3, 2007).

A Setback in Indiana

In Indiana, legislators had considered offering up to $20,000 in forgivable loans (loans that don’t need to be repaid) to graduates who agreed to work in-state for three years; if a graduate left before completing his or her three-year stint, there would be a repayment requirement. Unfortunately for students who planned on taking advantage of these “Hoosier Hope Scholarships,” the plan never advanced past the discussion stage. Fellow legislators objected to Gov. Mitch Daniels’ proposal to pay for the program by franchising the state lottery to private entities. But there still may be hope for graduates who plan to stay in-state: Daniels said he plans to reintroduce the idea next year.

Maine Residents Victorious

Although the plan for Indiana’s Hope Scholarships has stalled for now, Maine residents will see their own loan forgiveness program go into effect next year. As Jaschik reports, “Maine residents who graduate from college in the state will be eligible for 10 years of state tax credits of approximately $2,100 if they attended a four-year college and $1,000 if they attended a community college—provided that they needed the loans as part of a financial aid package. Graduates of private colleges are eligible as well.”

Jaschik’s article credits student activists with successfully campaigning for the state tax credits, a referendum that was recently signed into legislation. The students, who called themselves Opportunity Maine, decided to take action after hearing a growing number of students say they were “looking for jobs out of state,” even though they wanted to stay in Maine, “feeling that the salaries in the state wouldn’t give them enough to live on and repay their loans.”

The campaign for the loan forgiveness program referendum attracted bipartisan support and was signed into law Monday by Gov. John E. Baldacci. He hailed the measure as sending a strong message to the state’s students: “If you live, work and pay taxes in Maine, you’re not going to have this student debt hanging around your neck.”

Jury Is Still out on Brain Drain Incentives

Jaschik is quick to point out that offering such incentives may not be enough to keep students in their home states. “National experts on student aid and demographics have been dubious of the impact that tax credits like those in Maine can have. Generally, the criticism is that graduates look for cities with good jobs and—to a lesser extent—places they perceive as being exciting places for young people to live.”

The student loan advisors at NextStudent are helpful and knowledgeable about student loans. They are a trusted source in getting you the appropriate information about your student loan consolidation, student loan options and helping students get the college financing they need. Go to www.nextstudent.com for more information.

Be sure to tune in next Thursday for my next blog on student loan advice.

Student Loan Girl

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Hope On The Horizon: Student Debt Relief Act in Senate

Student Loan Girl — Thu, 25 Jan 2007 03:47:00 GMT

I have posted blogs in the past several weeks regarding states that are implementing college financial aid programs at the community college or public college level, making education an affordable reality for lower-income students. Just yesterday a major Ivy League school announced that it was freezing tuition for an entire year (see my Thursday, Jan. 25, 2007 post for more info). While this all is good news, nationwide reform implies national legislative action.

It seems that everyone is waiting to see what will happen in the U.S. Senate now that H.R. 5 has passed the House. Hot on its heals comes a tandem effort by Sens. Edward Kennedy, D-MA, and Barbara A. Mikulski, D-MD, introducing the Student Debt Relief Act, whose purpose is to supply college student aid to borrowers who use loans to cover costs of their education, according to a Jan. 23, 2007 press release titled “Mikulski Fights For Student Debt Relief” issued from Mikulski’s office.

American Dream or Financial Nightmare?

According to a statement by Mikulski, who also serves as a member of the Health, Education, Labor and Pensions (HELP) Committee, “College tuition is on the rise across America. Our students are graduating with so much debt it’s like their first mortgage,” said Mikulski. “American families are stressed and stretched, and students are looking for help. We must make access to higher education a priority for everyone.”

College Affordability Solutions on the Way

Our government officials, in particular Mikulski and Kennedy, who also serves as chairman of Senate Health, Education, Labor and Pensions, finally may have given voice to what many college students and their parents have known for quite some time. It is getting exorbitantly expensive to achieve the American dream of attending college. A recent survey I came across stated that many students now are “settling” for their second choice of schools, in order to incur less debt. Hopefully, the new bill, which appears poised to help borrowers and instigate much-needed change, will quickly become law.

According to the press release, “The legislation outlines relief for student debt by addressing a number of critical issues including:

· Pell Grants: Increases maximum Pell Grant to $5,100.

· Interest Rates: Cuts student loan interest rates in half – to 3.4 percent for subsidized undergraduate student loans over 5 years.

· Debt Relief: Caps federal student loan payments at 15 percent of a borrower’s monthly discretionary income, and forgives student loans after 25 years.

· Public Service Loan Forgiveness: Provides loan forgiveness for social workers, teachers, police officers and other public sector employees after 10 years.

· College Tuition Tax Deduction: Extends college tuition tax deduction and increases allowable deduction to $12,000.

· Consolidation/Reconsolidation: Allows students to reconsolidate loans, repeals the elimination of in-school consolidation.

· Origination Fees: Reduces origination fees in Direct Loan program by 1 percent to track FFEL program origination fee reduction, and gives secretary explicit authority to reduce origination fees (as FFEL lenders have).”

It is important to keep up to date on the effects of legislation and news on student loans and education. What goes on in government and in your state can have a great impact on your student loans and your college education.

For all the information you need about student loans, go to NextStudent.com. And to find more information on debt relief for unsecured debt visit ThinkDebtRelief.com.

Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.

Student Loan Girl

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