Temporary Respite for the Student Debt Holders

In this age where job opportunities for graduates are far more than for those who have only a high school degree, higher education becomes a very sought-after possession. Therefore, middle-class families go out of their way to help their wards to gain the coveted degree from the top schools and colleges. In this situation the only financial help that they can rely on are student loans, either federal or private, to fund their and their children’s dreams of being highly educated.

At a time when the country is reeling under economic depression and the tuition is as high as $50,000 per year at some of the private colleges, students have to go for multiple loans in order to fund their higher education. This fact could in some way explain how the American student debt has crossed the $1 trillion mark. The Occupy Wall Street movement might not have been able to have their demands fulfilled, but they have succeeded in helping the issue move up in the political “To-Do” list.

The interest rate fixed in 2007 for the subsidised Stafford loans was 3.4 for the low and middle-income groups who had a Stafford loan. This rate was scheduled to double on the 1st of July, 2012 if congress did not interfere in it. However, at the last moment, on the 29th of June, the congress did interfere keeping the imminent elections in mind, and fixed the rates at 3.4% for another year.

Even though this measure has been the cause of temporary relief for many a student, the danger has not receded yet. there is no guarantee either of all the graduates getting well-paying jobs so that they will be able to pay off the hefty amount or that the interest rate will not double again the next year. Therefore, students should look for other repayment options instead of waiting for the federal government to do something.

There are basically three types of student loans- federally guaranteed loans offered by banks and other lending institutions, direct federal loans issued by the federal government, and private loans from banks and other financial institutions. There are a number of misconceptions about the first two kinds of loans. While some people have a notion that federal loans take a long time in getting disbursed, another group believes that the applicant’s parents must have a high income in order to qualify for the loans. These facts are completely baseless as those who have already taken the loans to know.

The federal loans, instead, enjoy a number of loan payment options that are not available to those who have taken private loans. In fact, the federal loans were designed with such a crisis situation in mind. In today’s situation where student debt has outperformed credit card debt, students who have still not applied for loans are actually thinking about taking federal student loans.

There are a number of graduates who have not been able to secure a job that will help them to pay off their debts easily. In fact, getting any job has become a luxury that not many graduates enjoy. In this situation, a student with a federal student loan can apply for a loan deferment or delinquency. This will allow them to prepare themselves for the payments when the repayment period begins. Again they can also go for other options like consolidation, extension, etc. The private loans usually have the consolidation option open.

In any case, if you think that you might not be able to pay off the loan after you graduate then you have to take the necessary steps before you become defaulted. Generally, even in the case of a private loan, you will get a grace period of a few months, probably 3-4 months after you graduate before you have to begin the repayments. You have to take steps during this period so that the lenders do not transfer the account to the collection agency. These agencies are not only disturbing but can resort to any means imaginable to make you pay. Even though there is the FDCPA to shield you from getting fatally hurt, they can easily bruise you.

Temporary Respite for the Student Debt Holders

A. Overview of the Current Student Loan Crisis:

The student loan crisis is a pressing issue that affects millions of students in the United States and beyond. With the rising cost of education, more and more students are relying on loans to finance their studies. As a result, the total amount of student loan debt in the country has surpassed $1.7 trillion, making it one of the largest sources of consumer debt. The burden of student debt has led to numerous financial struggles for students, including difficulty in paying bills, delay in purchasing a home, and lower credit scores.

B. Purpose of the Article:

The purpose of this article is to discuss the recent development in the student loan relief, which provides temporary respite to the student debt holders. The article aims to inform the readers about the background of the student loan crisis, the details of the recent executive order on student loan relief, the controversy surrounding the relief measures, and the potential long-term impact on the borrowers. The article is intended to be a resource for students who are struggling with student debt and looking for information and guidance on the available relief options. By providing a comprehensive overview of the current student loan crisis and the recent development in the relief measures, the article aims to help students make informed decisions about their finances and take advantage of the available resources.

II. Background on the Student Loan Crisis:

A. Statistics on the Current State of Student Loans:

According to recent data from the Federal Reserve, there are approximately 45 million borrowers in the United States who hold student loan debt. The average student loan debt per borrower is around $30,000, and the total amount of student loan debt has surpassed $1.7 trillion. These statistics highlight the magnitude of the student loan crisis and its impact on the economy.

B. Discussion of the Factors Contributing to the Crisis:

There are several factors that have contributed to the current student loan crisis, including:

The Rising Cost of Education: The cost of higher education has been increasing at a much faster pace than the rate of inflation, making it difficult for students to finance their studies without taking out loans.
Limited Financial Aid Options: Despite the increasing cost of education, the amount of financial aid available to students has not kept pace, leaving many students with no option but to take out loans to pay for their education.
Lack of Awareness about Student Loans: Many students take out student loans without fully understanding the terms and conditions, including the interest rates, repayment options, and potential consequences of default.
Weak Job Market for Graduates: The weak job market for graduates has made it difficult for students to repay their loans, leading to a higher rate of default and loan delinquency.