|Student loan debt is something that might not seem like a big deal to those in the Baby Boomer or Gen X generations, but for a growing number of Millennials, those three words are absolutely terrifying.
Unless, of course, said Millennials happened to graduate from a small university in the little town of Adrian, Michigan, or has discovered that the federal government has allowed the Department of Education to give students more options for repaying their debt.
Universities like Adrian College are, unfortunately, few and far between. This school recently released an official statement that it plans to cover some, or possibly even all, of its graduates’ student loan debts if they manage to find a job after graduating, but earn less than $37,000 at that job. There are, of course, some strict regulations on the policy, and it is still in early experimental stages.
Nevertheless, students have reportedly been very receptive to the idea — probably because college students these days are getting used to the notion that they’ll spend the majority of their lives paying off four years’ worth of tuition.
Whereas the average American household is about $117,000 in debt, that amount of debt is just the starting point for many young graduates who end up defaulting on their payments because they can’t find jobs that pay enough money.
Even though, for the past 20 years, the government has allowed college grads to create repayment plans where the monthly minimum payment is a certain percentage of the debtor’s annual income, the Obama administration has changed this policy quite a bit to allow for greater flexibility and more government aid — but surprisingly, the majority of current college students and recent grads aren’t even aware of these changes.
Although the specific repayment options vary depending on the types of loan (or multiple loans) each student has taken out, one of the most popular options is to cap repayments at 15% of the debtor’s total income, and after 25 years, any remaining debts are forgiven.
Additionally, the Department of Education has an online repayment calculator tool which allows debtors to evaluate the repayment options that are available, ideally helping students pick out the repayment plan that is most feasible.
Hopefully, program advisers state, as the government begins to advertise the extra options through tax programs (like TurboTax), more students and college grads will find the assistance that is so desperately needed to pay off the country’s $1.3 trillion of student loan debts.