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How does the new student loan bill affect student loans that are already in existence?

Topic: Financial Aid | Asked by: Anonymous | Asked on 06/17/2010

Answers (37)

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The new student loan bill does not really affect student loans already in existence. The bill just means that students taking out new loans will be taking them out directly from the government rather than a lender. The only change for students who already have student loans will be to the Income-Based Payment Program, which will allow some borrowers to cap monthly payments on federal loans at 15% of their discretionary income. So if you have Federal loans, you won't have to pay more than 15% of your income, which is new. Other than that, none of the terms of the new student loan bill are retroactive, so they will only affect new applicants.

Answered by: Jjwalley Y. | about 4 years ago
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The new bill will not affect those who currently have loans. People who borrow money after July 1, 2014 will be the first to experience the new set of rules. The bill is not retroactive. If you take out loans after July 1, 2014 then monthly payments will drop to 10% of your discretionary income. Additionally the loan forgiveness period will rise from 20 years to 25 years.

Answered by: Jessica Al22 D. | about 4 years ago
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The student loan bill puts an end to the federally-guaranteed student loan program, where banks and financial institutions make federal education loans that are guaranteed against default by the US Department of Education. Instead, all new loans beginning on July 1st 2010 will be made through the Direct Loan program, where the funding comes directly from the federal government. Due to the legislation though, Current students will not notice much of a difference.

Answered by: Jen B. | about 4 years ago
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This differs from loan to loan. Different companies have different policies. It would be best to call the company and ask them to explain how it works. Chances are you will have more money to pay off with your extra loan. Good Luck

Answered by: Average Joe V. | about 4 years ago
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If you are using the same lender, then the additional charges that you signed to will be attached to the student loan bill. If you are looking to save money, I would try to pay interest payments during your college years as it will build toward the time you graduate with your college. I would also recommend avoiding getting charabanc and if you can find a way to pay I would try to pay the loans off as soon as possible.

Answered by: All Incorp O. | about 4 years ago
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The student loan bill puts an end to the federally-guaranteed student loan program, where banks and financial institutions make federal education loans that are guaranteed against default by the US Department of Education. Instead, all new loans beginning on July 1st 2010 will be made through the Direct Loan program, where the funding comes directly from the federal government. Due to the legislation though, Current students will not notice much of a difference

Answered by: Jen B. | about 4 years ago
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The student loan bill puts an end to the federally-guaranteed student loan program, where banks and financial institutions make federal education loans that are guaranteed against default by the US Department of Education. Instead, all new loans beginning on July 1st 2010 will be made through the Direct Loan program, where the funding comes directly from the federal government. Due to the legislation though, Current students will not notice much of a difference.

Answered by: Jen B. | about 4 years ago
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More than $40 billion in Pell Grants will be available now due to the health care bill student loan provision, which will roughly double the total amount of funding available for Pell Grants. The Federal Pell Grant will be awarded according to the Consumer Price Index from 2013-2017 at an estimate of $5,550-$5,975. Currently the maximum Pell Grant awarded for 2009-2010 academic year is $5,350, with an added option for receiving an additional disbursement of $2,675 in the summer. There is a student loan forgiveness program. According to a White House press release, students who borrow money starting July 1, 2014 will be able to cap their student loan repayments at 10% of their discretionary income (currently it is 15%).

Answered by: Professor V. | about 4 years ago
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As of right now, not a whole lot, it appears. I just checked a New York Times article on the bill, and it looks like a lot of the provisions don't go into effect until 2014, with the implication that those who borrowed before that won't be able to take advantage of the new provisions, such as decreased repayment caps and earlier forgiveness time.

Answered by: Null Terminator N. | about 4 years ago
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It helps you out immensely. You can apply for difference based on hardships and they can only take out a certain amount. Here's hoping they get rid of student loan debt.

Answered by: Zolty F. | about 4 years ago
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All existing loans will be grandfathered in, you should be unaffected.

Answered by: Jacksonupsidedown F. | about 4 years ago
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The bill will not change anything about loans that students have already taken out, but it does make helpful changes to the existing Income-Based Repayment program, which allows some borrowers to cap their monthly payments on federal loans at 15 percent of their discretionary income. For new borrowers, the bill will lower that cap to 10 percent of discretionary income and shorten the window for repayment from 25 years to 20 years, at which time the remaining balance of the loan may be forgiven.

Answered by: Jen B. | about 4 years ago
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When students graduate and begin to repay their loans, they should have a better customer experience. Private lenders will still service federal loans, but must win a competitive bidding process through the Department of Education to do it. Because the loans will be owned by the government, rather than private lenders, students' loans cannot be "securitized" that is, bundling a group of financial assets into a security and sold off to another bank. j

Answered by: Jen B. | about 4 years ago
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It can help you limit the amount of money you pay out of pocket. It allows you to get differments if you have experienced hardships. In short it can really help you out.

Answered by: Zolty F. | about 4 years ago
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Current students will not notice much of a difference. The student loan bill will end the federally-guaranteed student loan program, where banks and financial institutions make federal education loans that are guaranteed against default by the US Department of Education. Instead, all new loans starting July 1, 2010 will be made through the Direct Loan program, where the funding comes directly from the federal government.

Answered by: William A. | about 4 years ago
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The student loan bill will end the federally-guaranteed student loan program, where banks and financial institutions make federal education loans that are guaranteed against default by the US Department of Education. Instead, all new loans starting July 1, 2010 will be made through the Direct Loan program, where the funding comes directly from the federal government.Current students will not notice much of a difference because of the legislation though.The Direct Loan program offers the same Stafford, PLUS and Consolidation loans as the federally-guaranteed student loan program. There are some slight differences in the PLUS loan program. The Direct PLUS loan has a lower interest rate, 7.9% instead of 8.5%, and the PLUS loan approval rate is much higher in the Direct Loan program. Students will obtain their loans from the college financial aid office instead of having to find a lender. But otherwise the loans are nearly identical in the two loan programs.

Answered by: William A. | about 4 years ago
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Well it affects in a few ways. First I had to resign the MPN which means master promisary note on the FAFSA website. Also it means our loans are through the government now I believe. If you have more questions about this I suggest asking your finical aid consuler they coud answer more questions about it too.

Answered by: Momtrying2makeit Z. | about 4 years ago
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The new student loan bill is good for loans that already exist. You can fine for reductions based on hardship. You can also restrict the payments to below 10% of your wage.

Answered by: Zolty F. | about 4 years ago
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It wouldn't have an immediate effect on existing loans. The new law signed by Obama in March 2010 states that students who borrow money starting in July 2014 will be allowed to cap repayments at 10 percent of income above a basic living allowance, instead of 15 percent

Answered by: Mixtape C. | about 4 years ago
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The new student loan bill will not affect student loans that are already in existence in any significant way. The only difference is the student loan bill will eliminate the middle man by getting rid of lenders in the process. Instead the money will be given directly to students from the federal government to students through financial aids offices. Also, in the future the amount of interest could be lower compared to the past. Basically, the effects of the bill are for the students incurring new loans from the government. In the end, any changes are meant to help the student not lenders.

Answered by: Mattwrt Z. | about 4 years ago
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I don't think it affects loans that are already in effect. I would check with your school's financial aid officer. They would know for sure and would be able to help you with any other questions or concerns that you may have.

Answered by: Brittanycalla X. | about 4 years ago
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Loans that are already in place will not be affected. This new proposition is for loans starting in 2010. If the bill can help with your student loan it may be worth looking into and seeing if there is a way to re-take out an existing loan with a new lender so that you can be benefitted.

Answered by: Molea06 I. | about 4 years ago
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Students received an early reminder of their looming debt a few weeks ago, when a new law overhauled the federal lending program. Under the rejiggered system, the Education Department will provide all federal loans through college financial aid offices.Students who already have FFEL loans won't be required to make any changes. But there are scenarios when it makes sense to switch over to the direct loan program.Graduates don't have to fear being handed a bill with their diploma; most federal loans come with a six-month grace period. But interest continues accruing during that time, so the sooner repayment starts the better.

Answered by: 123hit. B. | about 4 years ago
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The new student loan bill doesn't affect previously taken student loans at all. The new bill states that the government company, Direct Loans, only will be giving out all future student loans. The are cutting out all private lenders.

Answered by: Thegreatesthumphrey J. | about 4 years ago
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The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students. It will also expand Pell grants, making it easier for students to repay outstanding loans after graduation.

Answered by: Wizard Q. | about 4 years ago
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Students received an early reminder of their looming debt a few weeks ago, when a new law overhauled the federal lending program. Under the rejiggered system, the Education Department will provide all federal loans through college financial aid offices. Students who already have FFEL loans won't be required to make any changes. But there are scenarios when it makes sense to switch over to the direct loan program.A consolidation loan is used to combine several federal loans, so borrowers only have to pay a single monthly bill.

Answered by: 123hit. B. | about 4 years ago
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The new student loan bill doesn't really affect those that have already taken loans. The new bill has the federal government issuing all the loans now as direct loans, instead of using banks to issue the loans. Also the monthly payment will drop to 10% of your discretionary income, but these changes are only for new loans given after 2014.

Answered by: Jessica Al22 D. | about 4 years ago
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I don't think it affects loans that are already in effect. I would check with your school's financial aid officer. They would know for sure and would be able to help you with any other questions or concerns that you may have.

Answered by: Brittanycalla X. | about 4 years ago
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Loans that are already in place will not be affected. This new proposition is for loans starting in 2010. If the bill can help with your student loan it may be worth looking into and seeing if there is a way to re-take out an existing loan with a new lender so that you can be benefitted.

Answered by: Molea06 I. | about 4 years ago
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Students received an early reminder of their looming debt a few weeks ago, when a new law overhauled the federal lending program. Under the rejiggered system, the Education Department will provide all federal loans through college financial aid offices.Students who already have FFEL loans won't be required to make any changes. But there are scenarios when it makes sense to switch over to the direct loan program.Graduates don't have to fear being handed a bill with their diploma; most federal loans come with a six-month grace period. But interest continues accruing during that time, so the sooner repayment starts the better.

Answered by: 123hit. B. | about 4 years ago
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The new student loan bill doesn't affect previously taken student loans at all. The new bill states that the government company, Direct Loans, only will be giving out all future student loans. The are cutting out all private lenders.

Answered by: Thegreatesthumphrey J. | about 4 years ago
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The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students. It will also expand Pell grants, making it easier for students to repay outstanding loans after graduation.

Answered by: Wizard Q. | about 4 years ago
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Students received an early reminder of their looming debt a few weeks ago, when a new law overhauled the federal lending program. Under the rejiggered system, the Education Department will provide all federal loans through college financial aid offices. Students who already have FFEL loans won't be required to make any changes. But there are scenarios when it makes sense to switch over to the direct loan program.A consolidation loan is used to combine several federal loans, so borrowers only have to pay a single monthly bill.

Answered by: 123hit. B. | about 4 years ago
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The new student loan bill doesn't really affect those that have already taken loans. The new bill has the federal government issuing all the loans now as direct loans, instead of using banks to issue the loans. Also the monthly payment will drop to 10% of your discretionary income, but these changes are only for new loans given after 2014.

Answered by: Jessica Al22 D. | about 4 years ago
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The switch over will begin on July 1, 2010. Durning the following 10 years, the United states government seeks to make $500 billion in loans to students according to the CBO. (Congressional Budget Office) Read more at Suite101: Obama Student Loan Reform Bill Government Loans: New Education Reform and Federal Student Loan Consolidation http://student-loans.suite101.com/article.cfm/obama-student-loan-reform-bill-government-loans#ixzz0qQuGNxZp

Answered by: Tejasraval W. | over 4 years ago
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It seems that the new bill offers many incentives but most of them apply to new student loans. This bill allows many existing borrowers to setup affordable repayment plans and reduces the student loan forgiveness period from 25 years to 20 years. Additionally, the government has added a new mandate to this bill that is specifically aimed at low income graduates who are carrying a lot of existing debt. They will now be able to participate in programs that specifically reduce the mandatory minimum percentage of income that's automatically deducted from a weekly or biweekly paycheck. In other words, the government or the court will not deduct 15% of the monthly income for low income graduates, but will instead base that decision on size of debt as well as actual ability to pay.

Answered by: Jack44 M. | over 4 years ago
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Students received an early reminder of their looming debt a few weeks ago, when a new law overhauled the federal lending program. Under the rejiggered system, the Education Department will provide all federal loans through college financial aid offices starting July 1, 2010 Previously, families were able to obtain government-backed loans from private lenders through the Federal Family Education Loan program, or FFEL.

Answered by: Hemjjd H. | over 4 years ago
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