Personal Unsecured Student Loans

Student loan relief plan announced by President Obama

Addressing a crowd of 4000 at the University of Colorado, President Obama announced recently that, “We can't wait for Congress to do its job, so where they won't act, I will". His message continues his present initiative to circumvent Congress through executive actions with the purpose of improving the economic health of the country. The university setting was selected to introduce a new plan to ease the burden of student debt on graduates unable to manage the ever-increasing cost of education.

Stephen Marcus, President of A New Horizon Credit Counseling Services comments, “Federal and private student loans now exceed US credit card debt. There are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program alone. Repaying this, without relief or assistance from the government or a credit counseling agency, at a time of high unemployment is nearly impossible.”

The plan announced will allow approximately 1.6 million students to cap their loan payments at 10% of their discretionary income starting in 2012 rather than the current cap of 15%. It also permits the balance to be forgiven after 20 years of payments rather than the current 25 years of payments.

Marcus adds, “With graduates entering the toughest job markets in decades, this program will provide some relief, but not nearly enough. We also recommend that graduates examine their entire debt repayment plan with a certified credit counselor and develop a debt management plan that will give further relief on credit card, medical, and a wide assortment of unsecured debt.” Student loans can not be eliminated through bankruptcy proceedings, unlike other unsecured debt. Add to that the prospect that a college education is not yielding the high paying jobs to justify their inflated costs and you have a real challenge for graduates.

“Steps like these won’t take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference," announced President Obama.

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