Student Financial Aid News

From Forbes:

Borrowers drowning in high student loan debt will be thrown a life preserver on July 1. That’s when a new program is scheduled to begin that will allow former students to make monthly payments based on how much they make, rather than the amount they owe. The option to pay based on your income may sound promising, but there are a few catches… income-based repayment will only be available for federal student loans that are in good standing. Under this plan, borrowers’ monthly payments will be capped at 15% of the amount by which their income exceeds the federal poverty level (currently $16,245). If your income rises, so will your monthly payments. Any debt that you haven’t paid off after 25 years will be forgiven. However, the government will regard the forgiven balance as income for tax purposes.

Commentary

Generally good news for unmarried graduates not making a lot of money. Those who graduate with incomes higher than average will want to choose a standard repayment plan for their federal student loans as opposed to an income based repayment plan. Having the flexibility to choose will be helpful.

The key critical point here is that students MUST have their federal student loans in good standing. No late payments, no defaults, so if your federal student loans are not in good standing, it’s absolutely critical to rehabilitate them as soon as possible.

From the NY Times:

With American college costs rising, and the American dollar strong against the Canadian currency, more and more high school students are looking to Canadian universities for their college education. The cost advantage is enormous. Because Canadian universities are publicly financed and heavily subsidized by the government, even the higher tuition for foreign students is only about $15,000 — about half as much as at a selective American liberal-arts college.

Commentary

McGill is often described as Harvard at half off. While you may not necessarily qualify for federal student aid if you attend a Canadian university, it’s still worth investigating the option. You may find that a Canadian university that you pay cash to is still a better deal than a US university with federal student loans, especially if private student loans are still an option for the Canadian school.

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