Obama’s Student Loan Bill: Saving Grace For 2013 Student
Posted: Oct 07, 2013
With the stresses of financial difficulty stemming from paying for school burdening millions of American students, the recent student loan bill that President Obama signed might spell relief. The question now is whether or not this new reform will empower students with lighter interest rates leading to financial success or create a whole new economy crash for a generation that has felt the largest strain for school in history. Only time will tell, but in the meantime, we can only take educated guesses.
What Is the Student Loan Bill
The Obama student loan bill is a bipartisan agreement (meaning both representative parties in the White House agreed to the terms) guaranteeing students of 2013 a lower interest rate than the frightening 6.8% interest rate that was seen following congress’ inability to agree on a way to keep student loan interest rates low. The bill, signed by President Barak Obama, reduces the student loan interest rate to 3.4%. President Obama admits that while the lower interest rate is a start to what he is trying to accomplish there is much work left to do in order to solve the billions of dollars in student loan debt that the United States is currently facing. With the current financial depression plaguing the U.S., the government is scrambling to tidy up the financial future of the next generation of leaders.
How Does It Affect Me Now
For current students who will obtain “Obama student loans” this new bill spells immediate relief for some of the overwhelming financial stress that comes along with borrowing money for school. The benefits felt by students receiving loans for September 2013 will include an almost 50% reduction in interest rates leading, in some cases, to over $1, 500 per year saved in interest charges alone. In a bad economy, the government can borrow money at low rate, allowing for lower interest rates and less immediate financial stress for students.
With these rates secured until 2015, students can rest easy in the present knowing that the promise of doubled student loan interest rates is no longer an immediate threat to their financial future thanks to Obama’s student loan bill. Thanks to a poor economy, this bipartisan agreement may allow certain individuals a chance for education that did not exist before.
How Will It Affect Me Later: How Can I Protect Myself
There are some indications that the reduction of interest rates that are produced by the Obama student loan bill may create an increasingly difficult future. The problem is that, though the interest rates of the student loans are remaining in the low 3% range for now a sudden boost in the economy will quickly inflate interest rates to match the cost of borrowing for the government. That means that with the imminent increased economy that is expected in the next year or two will take the interest rates to levels never seen before. To protect yourself, make sure you check your credit report regularly. Keeping your credit score high and proving yourself to be a worthwhile investment can prevent you from paying additional interest charges for credit outside of your government loan. Maintaining low cost of living and low bill payments means that there will be less financial stress in the case of unexpected hikes in Obama student loan interest.
Additionally, protect yourself by saving as much as you can during school and summer vacation to pay off as much of your loan as you can when you graduate. The less your student loan is, the more money you will save on interest in the long run. This technique can save you thousands of dollars over the length of your loan repayment.
While Obama’s student loan bill provides some immediate relief for students who require government assistance to attend post-secondary institutions, the fact remains that borrowing money during a poor economic time may be easy but it can come with some heavy repercussions. Remember to plan your education effectively to save yourself unnecessary interest charges and to get out of student debt quickly. With good planning and taking time to review your credit report, you can leave college relatively unscathed.
Joy Mali is an active blogger who is fond of writing articles on Finance and advising people to monitor their credit history to ensure a clean and error free report. Follow her on Twitter to know more on student loans more accessible means more debt for students.