Tuesday, June 10, 2014

Student Loan Directive

Student loans are something a large percentage of americans may turn to when looking to further their education and increase their earning potential and job possibilities.  Student loans are a great way for those unable to save enough to pay for college or those that have other financial obligations that cannot be put off. Unlike other types of loans or lines of credit student loans can be put off for a period of time while attending school and for a term after to allow you to begin to repay after you have secured work in the field of study you chose instead of burdening you with the responsibility of repayment when you are in a position where default is the most likely scenario.  President Obama in an attempt to aid students struggling to repay student loans signed a directive that puts a cap on the amount students can be required to repay on an annual basis to 10% of their total income.  This was done to reduce the number of defaulted loans and to encourage potential students to apply and utilize student loans without fear they may bot be able to repay them after they have graduated. This all sounds good at first but now lets look at the possible negative impacts this directive may introduce that were not even possible before.  President Obama was almost immediately publicly criticized for the action on the basis that he is encouraging non payment by allowing forgiveness after 20 years and capping the amount student can be required to repay to 10% of their total income annually.