The income contingent student loan repayment allows borrowers to pay less than the standard repayment by modifying the monthly payment amount to percentage of the borrower’s income. This lower monthly payment is helpful due to the rise of low paying jobs for college graduates; however, if continued without changes, graduates will carry this debt years longer than necessary.
Using myself as an example, I was put on the income contingent plan several months ago and noticed that 96.5% of my monthly payment was being applied to interest; therefore, the $55,000.00 principle balance was decreasing in mere $5.00 to $20.00 increments. This is due to a "discounted" simple interest rate of 4.89% and the daily simple interest accrual. The Income Contingent Plan, interest rate, and the daily accrual mix together to an unacceptable, predatory, and malicious act against millions of today’s graduates. Many graduates are stuck in this plan because they cannot afford to make higher payments.
When then President George W. Bush was elected to office in 2004, he advised Americans that we needed degrees to make more money; thus, advising people to go earn a degree in college. I followed his advice and now find myself overwhelmed in $55,000.00 in debt, a monthly loan payment of $227.09, where only $5.00 to $20.00 goes to principle, while holding a Bachelors of Science in Business Degree that has shown me no advantages, opportunities, and prosperity. It is my hope that this petition brings to light the reality of what many of us are experiencing.
In order to work toward a solution, our Government needs to recognize the problem and lower the interest rate for graduates enrolled in the income associated repayment plans. Times have changed since many of us enrolled in college and the Department of Education along with the Federal Government need to adjust repayment plans accordingly. We do not believe the money we borrowed should not be paid back in full; however, we believe the interest rate needs to lessen significantly. The unnecessary gauging of graduates through interest is unethical, heartless, and deceitful. Myself and other graduates on the Income Contingent Plan feel trapped in embitterment, frustration, and helplessness.
Please sign my petition at: http://www.change.org/petitions/stop-student-loan-payments-are-paying-in...
Best,
Randy Bayles
A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education.
Subsidized loans are the government's way of motivating students to pursue education. Graduate pupils, in 2012, will be asked to pay the interest that was formerly subsidized. All told, the move will shift responsibility for $18.1 billion to already-strapped university students. Graduate student loans to lose interest subsidy. Student loan indebtedness is pointed to as one of the major causes of this disparity, as is the difficult job market. This move by Congress to increase the cost of higher education loans is likely to make this gap even worse.
