(EMAILWIRE.COM, July 29, 2009 ) Fort Lauderdale, Florida July 29, 2009

FIRST in a three-part series:

Since July 1st, college students have seen a few things changing with their financial aid packages. These changes are designed to make education more available and affordable to everyone. The Obama administration has announced several initiatives designed to accomplish this, including:

• Federal loans now feature lower reduced interest rates. As of July 1st, the interest rate on these loans dropped to 5.6 percent from 6.0 percent. The government has announced that interest rates will be reduced each year, ending at a final low of 3.4 percent in 2011. Furthermore, students who obtained Stafford loans before July 1, 2006 are eligible for an interested rate reduction of 1.7 percent.

• Student loan repayments will be based on income. Beginning July 1st, student loan repayment amounts will be revised. Eligible students whose current loan payments are more than 15 percent of their discretionary incomes may apply to have their payment reduced. (Discretionary income is calculated based on the poverty level and family size multiplied by 150 percent.) All types of federal student loans qualify, but parent-based (PARENT) federal loans do not. After making payments for 25 years, the debt will be forgiven whether or not it has been paid in full. Certain conditions apply; for more information contact the National Association of Student Financial Aid Administrators (NAFSA). This program is now known as the Income-Based Repayment Program (IBR).

• Origination fees on federal student loans will be decreased. Starting July 1st, the fees required to process Stafford loans will decrease from 1 percent of the loan amount to 0.5 percent. This reduction will remain in force until June 30, 2010. In some instances, students may be charged an additional upfront fee of 1 percent for loan insurance. In this case, the fee will be decreased by 1.5 percent.

• The Department of Education announced the cancellation of the PLUS Loan Auction Pilot Program. This program, which was intended to be offered effective July 1st, 2010, did not receive interest from enough lenders to make offering the program feasible at this time.

• Students will no longer be able to obtain an economic hardship deferral of their federal loans under the 20/220 pathway. The government believes that students who would have previously qualified for a deferral based on this program will be adequately served by the IBR program. On July 1st, 2009, the 20/220 pathway ended as scheduled. Previously, loan recipients who worked full-time, whose monthly income was less than 220 percent of the poverty level or minimum wage after education loan payments were eligible for deferral.

New changes were also introduced for Federal student grants and military benefits as well. Look for these updates at www.degree.com the premier online degree program internet portal featuring the top degree programs for on line studies.

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Sheila Danzig
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