WASHINGTON DC — Major changes may be coming to how you repay federal student loans.
U.S. Department of Education officials say a new plan will prevent people from getting overwhelmed with debt.
Channel 2′s Washington Correspondent Kirstin Garriss looked into the new plan and the potential impact on borrowers.
The new plan is called the “student loan safety net”
Education department officials say it would cap payments for undergraduate loans. Meaning what you owe each month would be lower.
[DOWNLOAD: Free WSB-TV News app for alerts as news breaks]
The proposal focuses on debt repayment plans that are based on your income. Currently, the federal government offers four of them.
This new proposal would streamline the process to one simplified option that caps payments.
As long as borrowers make those payments, officials say unpaid interest won’t be added to their balance.
Another part of the plan helps those who have smaller loans.
For those, it would erase all remaining debt after a decade.
The White House estimates a typical four-year college graduate would save about two thousand dollars a year in payments.
The administration believes about 85 percent of community college borrowers would be debt free within ten years.
Opponents of the plan are concerned about the hefty price tag.
TRENDING STORIES:
- Lineman killed while cleaning up fallen trees after storms in Jasper County
- Miss Universe pageant: Miss USA, R’Bonney Gabriel, crowned
- Rockdale County deputies search for woman kidnapped by man described as ‘armed and dangerous’
The Biden administration estimates this would cost about 138 billion dollars over ten years.
Some critics say the cost is closer to 200 billion.
So when could you see these changes?
The education department has to take public comment before it can finalize these rules.
It then plans to some provisions later this year.
[SIGN UP: WSB-TV Daily Headlines Newsletter]
IN OTHER NEWS:
This browser does not support the video element.