Right now, college seniors may be more tuned into passing their final courses and getting a job than paying off their student loans. But when they are ready to think about how to manage that looming debt, the U.S. Department of Education has new features on its StudentLoans.gov website to help.
On Tuesday, the department announced a “Complete Counseling” Web page and a new “Repayment Estimator” that lets borrowers compare what their monthly payment amounts would likely be with seven different repayment-plan options.
“With college graduation around the corner, thousands of students will soon start to repay their loans, and we want to help them select the repayment plan that makes sense for them,” said U.S. Secretary of Education Arne Duncan in a statement. “These tools give students the information they need to understand how to better manage their student-loan obligations. Our goal is to make the entire challenge of college costs much less daunting, and these tools are additional steps in that direction.”
Last week, U.S. Rep. Karen Bass (D-Calif.) introduced the Student Loan Forgiveness Act in an effort to alleviate the burden of student debt by requiring individuals to make 10 years of payments at 10 percent of their discretionary income, after which, their remaining federal student-loan debt would be forgiven.
Two-thirds of college seniors who graduated in 2011 had student-loan debt, with an average of $26,600 per borrower, according to the Project on Student Debt.
With student-loan debt nearing $1 trillion, some are becoming wary of going into debt for college. But research shows the investment is worth it in terms of the bump in lifetime earnings that college graduates get over those with just a high school diploma.
Headlines about massive student-loan debt are unnecessarily scaring some students away from borrowing, suggests Christopher Shea in an article in The Washington Post Sunday.
He illustrates how excessive borrowing to attend for-profit colleges is skewing the average debt loan and affecting public perception. Graduates of for-profits rack up an average of $45,000 in debt, compared with $15,500 for those who attend a private nonprofit and just $7,500 for student who complete a degree at public four-year colleges, notes Shea.