The White House has enacted initiatives that present students with more options for repaying their loans; however, only 14 percent of students with federal student debt are enrolled in these programs.
“From reforming the student loan system and increasing Pell Grants to offering millions of students the opportunity to cap their monthly student loan payments at 10 percent of their income, making a degree more affordable and accessible has been a longtime priority for the president,” read a statement from the Office of the Vice President last summer. “But he knows there is much more work to do and that’s what this week is all about.”
But the White House has had a problem communicating these reforms effectively. The goal of the White House’s initiatives is to prevent borrowers from defaulting on their loans, as 20 percent of students resort to this action.
But there is a lingering issue. Many students and graduates are unaware of their options. And many of those who are aware remain confused about the choices and terms of their agreements.
While the White House has worked to assist graduates with their loans, more can be done to inform the borrowers of their options. Better loan counseling and outreach after students enter repayment could ensure greater knowledge for graduates.
One of the most available loan repayment options is the income-based repayment (IBR) plan, which caps payments to about 10 percent of your income and forgives any balance that exists after 25 years. The calculation is based on your discretionary income, or whatever you earn above 150 percent of the federal poverty line ($17,505 for a single person).
Students can also choose to consolidate their loan payments for free through the federal government. Loan payments would be centralized to one bill and would reduce the amount paid monthly. However, this method would require students to pay their loans over the course of 30 years, which would result in the accumulation of more interest.
Boston College also attempts to aid in the loan repayment process. Students who have borrowed Perkins, Nursing, Law School, Sharp, Bank of America, Graduate PLUS, or Stafford loans while attending BC must complete an exit interview prior to leaving. The Financial Services webpage for BC also offers a few tools and advice to help plan for types of loans, eligibility for loans, and tuition payment.
In addition, BC has financial literacy programs to help students prepare financially for their present and future.
SALT, a financial literacy program created by American Student Assistance, helps current BC students become more financially knowledgeable. This program rewards students for making smart money decisions, and provides all of its services to students free of charge.
Successful Start offers tools--including mentors and workshops--that aim to ensure that BC students are financially literate during their lifetime. They offer workshops on topics ranging from credit and credit cards to loan management and small business start-up.
Although loans and financial aid are generally confusing topics, taking advantage of resources created by the White House and Boston College can help students become financially literate for the present and the future.