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Obama Signs 2010 Student Loan Act

Does the 2010 Income Based Repayment Program Affect You?

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March 30, President Barack Obama signed the Health Care and Education Reconciliation Act of 2010. Health care reform got all the big press, but the act also included great news for students with education loans. This is what Obama had to say about the overlooked portion of the act:

"But what’s gotten overlooked amid all the hoopla, all the drama of last week, is what happened in education -- when a great battle pitting the interests of the banks and financial institutions against the interests of students finally came to an end."

Jesse Lee wrote about the matter in the White House Blog:

"The President explained that the government will reinvest the savings back into education by upgrading community colleges, increasing Pell Grants, and making it easier for responsible students to pay off their loans."

Lee explained that, "The President was referring to reform of student loans to make higher education more affordable, allowing students to get loans without relying on large banks as unnecessary middlemen, and saving American taxpayers $68 billion in the coming years."

What does this mean for you as a non-traditional student with a loan?

The act includes a new plan for giving students up to 20 years to pay off loans at a rate calculated by how much you earn and how big your family is, depending on the kind of loan you have. It's called the Income Based Repayment Plan.

Brian Levine, deputy domestic policy adviser to Vice President Joe Biden, described the plan on the vice president's Middle Class Task Force site:

"Borrowers who choose the Income Based Repayment program will have their monthly payments capped at 10 percent of the income they have left over after covering basic needs, and any remaining debt will be forgiven after 20 years. Public service workers – like teachers, nurses and members of our armed forces – will have their remaining debt forgiven after 10 years."

Great news? I think so.

The federal student aid site has a handy calculator, a Q&A, and other great info. Check it out.

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