July 1 student loan deadline arrives
Experts detailed what federal student loan borrowers can expect as recent changes defined by the U.S. Department of Education take effect in July.
Student loan debt exceeds $1.5 trillion and impacts more than 40 million Americans, according to a news article from ABC News. The experts cited in the article emphasized that the changes represent some of the largest measures of reform to the student loan system in decades. For instance, in addition to lifetime loan caps of $100,000 for graduate students and $200,000 for professional students, new borrowers will have to choose between two repayment plans: the Repayment Assistance Plan or the Tiered Standard repayment plan. All other plans will be eliminated or phased out. Further, about 7 million borrowers on the Saving on a Valuable Education plan will have just 90 days to switch to a new student loan repayment plan.
Despite the Education Department’s claims that the new borrowing limits will reduce excessive borrowing, the experts stressed that borrowers could be discouraged from attending certain programs. They also noted that some borrowers who switch to the Repayment Assistance Plan could see increases in their monthly repayments and indicated that the rate of defaulted loans could rise as a result.
Read more: ABC News
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