"Americans have a lot of student loan debt. And many people are paying down that debt with something called an income-based repayment plan. That’s where your payments are based on your income and you pay a percentage of that income every month. If after 20 to 25 years you haven’t paid off those loans, the government will waive what remains," MarketPlace reports.
"So how much is that going to cost the government? The Congressional Budget Office answered that question Wednesday in a report: about $207 billion over the next decade.
It might sound like the government’s issuing a Get Out of Jail ree card for all student borrowers. But Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, said graduate students stand to benefit the most.
'There are less subsidies, less grants available for graduate students, and there are more high-cost programs for graduate students,' he said.
The CBO report says grad students on income-based repayment plans owe $92,000 on average. That’s five times what an undergraduate on the same plan owes.
And over the last decade, the percentage of grad students participating in the program has grown sixfold. Draeger said while the program was meant to be a safety net for students, more students are needing it.
'It should be a warning signal that we have distress in the student loan market,' Draeger said."
Listen to to full interview.
NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.
Publication Date: 2/14/2020