Towards the end of 2012, President Obama introduced a new student loan repayment program called: Pay as You Earn. It was activated on December 21, 2012, for all eligible borrowers.
Here is the information on the repayment plan according to the Department of Education:
To qualify for Pay As You Earn, you must have a partial financial hardship. You have a partial financial hardship if the monthly amount you would be required to pay on your eligible federal student loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under Pay As You Earn.
For this purpose, your eligible student loans include all of your William D. Ford Federal Direct Loan (Direct Loan) Program loans that are eligible for Pay As You Earn, as well as certain types of Federal Family Education Loan (FFEL) Program loans. Although your FFEL Program loans cannot be repaid under Pay As You Earn, the following types of FFEL Program loans are counted in determining whether you have a partial financial hardship: Subsidized and Unsubsidized Federal Stafford Loans Federal PLUS Loans made to graduate or professional students Federal Consolidation Loans that did not repay any PLUS loans for parents
You also must be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1, 2007, or had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new loan on or after Oct. 1, 2007. Your payment amount may increase or decrease each year based on your income and family size. Once you’ve initially qualified for Pay As You Earn, you may continue to make payments under the plan even if you no longer have a partial financial hardship.
Under this plan your monthly payments will be capped at 10% of your discretionary income. What is discretionary income? As defined by ED: “Your income minus the poverty guidelines for your family size.”
Here is an example if you are a family of 4 and your income is $50,000 annually. You would take $50,000, subtract the poverty level for your family size, which is $23,550, and your remaining “discretionary income” is $26,450. $26,450 divided by 12 months is $2,204. So under the “Pay As You Earn” scenario your monthly loan payments would be capped at 10% of this discretionary income or $220 per month.
Another advantage of this plan is that if you make 20 years of consecutive on time monthly payments under this program, the remaining amount of your student loans will be forgiven.
20 years is a long time…
The Bottom Line
This new repayment program only scratches the surface of the real problem with student loans: high college costs and students having zero financial sense.
It does however, give some respite for families who are struggling under the burden of student loan repayment. It may not help you pay off your student loans any faster, but it may help ease your monthly budget. Especially if you have a large family size, as your discretionary income fluctuates based on the poverty guidelines for family size.
If you are wavering on whether to switch to this new repayment plan or not, you can use the handy calculator at the Department of Education’s website, and it will tell you if this new repayment plan will save you any money or not.
Do you think this is worth a try? Or this just another government bailout is disguise?
When the dreaded “Sequester” deadline was passed on March 1st, we all thought the financial world might implode. Many politicians painted a dreary picture for the future state of our economy, and government frustration was at an all time high. Then the fallout of the sequester began to take shape.
One of the worst impacts of the sequester was the elimination of the Tuition Assistant (TA) Program for the United States Military. Separate from the G.I. Bill, the TA program provided up to $4,500 per year for active duty soldiers to take classes. Over 870,000 courses were taken last year by soldiers in this very popular program.
Needless to say the outcry was quick, and powerful.
The military was in a fury over this, and the general public was also rightly outraged. How are we showing support to our military if we cut the funding necessary for them to further their education?
Where Do We Go From Here?
Not even 3 full weeks later, and Sen. Kay Hagan from North Carolina passed a continuing resolution through the Senate that reinstated the Tuition Assistant program for active duty military under the Department of Defense.
So the program is back on, and soldiers can continue taking their courses.
What can we learn from all of this?
- It’s best to have a back up plan!
- Diversification is key
- Financial Aid can be fickle
For the majority of college students around the country Graduation just happened. At the school I work at, we just released 2600 newly minted students to the world to seek their fortunes. This is a scary time for most graduates. Entering the work force in the current economic climate is daunting, and they are faced with odds that are already stacked against them. And unfortunately, not a single one of those college classes taught them how to get out of debt.
Fortunately, there are specific steps that new college graduates can take to avoid falling into the consumer debt trap that so many of their fellow students find themselves in.
Continue your college lifestyle for as long as possible!
There is no shame in this, and the stigma of living on ramien noodles and single ply toilet paper is rapidly receding. In fact, I would say that adults who are long removed from their college years are increasingly moving back towards their “college spending” days to save money and avoid falling further into debt.
In college, you don’t need “stuff” because you have friends and real human relationships to occupy your time as opposed to china patterns and big screen tv’s. By avoiding the trap of lifestyle inflation as soon as you get a job, you will be able to establish a firm foundation, start paying off your student loans, establish an emergency fund, and even set aside money for your future (spouse, marriage, kids, house, new car, travel). Setting a plan, and understanding the downside of falling into lifestyle inflation will help you avoid these common mistakes.
Make a Savings/Spending Plan
One of the best pieces of financial advice my parents ever gave me was to set a strict budget and keep to it. Having a firm grasp of your budget and income needs will tell you very quickly the lifestyle you can expect to have.
In fact, if you have a Stafford Student Loan, you will be required to complete exit loan counseling when you graduate, and you will have the opportunity to create your first sample budget in that counseling session.
Understanding that a high income is got a right granted upon graduation will help you face reality, and plan accordingly. Sticking to your savings and spending plan, will help you keep that vision in check.
Deadline: May 30, 2012
The Healthy Lifestyles Scholarship is open to high school seniors and first-year college students. You must be a citizen of the U.S. or Canada and be under 25 years of age to be eligible for this award. You must also submit a maximum 1000-word essay on the following topic: “Why is a healthy lifestyle important in school?”; and in under 500 words, describe your career plans, goals, and personal ambitions.
How to Apply:
There is no Formal Scholarship Application. To apply for the Healthy Lifestyles Scholarship, please write your scholarship essay in Microsoft Word or, if you do not have Microsoft Word, in Google office, the latter is free to use on the Internet. After you are finished the writing process, please attach it to an email and send it to: firstname.lastname@example.org. If you have any questions or concerns, please forward them to Linda Wells (email@example.com ).
April 2011 – Carmelo Vargas – Texas
December 2010 – Shifang (Stephan) Cheong – California
May 2010 – Elizabeth Maalihan – Florida
December 2009 – Michael Striker – Minnesota
Awards Available: 1
As of May 30th, 2012, be under 25 years of age.
Be currently a senior in high school or in your first year of college/university
Be a resident of the United States or Canada
Answer the following essay questions:
1) In under 1,000 words: “Why is a healthy lifestyle important in school?”
2) In under 500 words: Describe your career plans, goals, and personal ambitions
The $5000 award will be presented to the student who provides the most comprehensive answers to the two questions.
You could also win an additional scholarship.Win $1000 by taking part in Thepensters Writing Contest for college students.
Award: $5000 , $3000, and $2000
Deadline: May 1, 2012
The Copyright Awareness Scholarship is available to students between the ages of 13 and 25. To be considered, you must creatively present your viewpoint on the importance of intellectual property and copyright law. Entries must include a multi-media component, which can be one or all of the following: audio, video, or PowerPoint files. All audio, video, PDFs, and PowerPoint files must be saved to a CD or DVD and mailed in with the entry form. Audio and video projects should be under five minutes in length.
How to Apply:
HOW TO ENTER: To enter, beginning December 1, 2011, go to www.mpa.org or www.nafme.org and follow the instructions for completing the Application and uploading your Submission. Applications must be submitted by Tuesday, May 1 no later than 11:59 PM EST.
Limit one (1) Application and Submission per person. Written, pictorial, audio or video responses that are obscene, pornographic, defamatory or otherwise objectionable will be disqualified. All Applications and Submissions become the property of the Sponsor and will not be returned. Sponsor assumes no responsibility for lost, late, misdirected, or unintelligible entries. By submitting an Application and Submission, you fully and unconditionally accept and agree to these Official Rules and the decisions of the Sponsor, which are final and binding.
NAFME is looking for students to creatively present their viewpoints, in VIDEO format, on The Importance of Intellectual Property and Copyright Law. All submissions must consist primarily of original material. If a submission contains copyrighted material (e.g., a song, a video clip) owned by another party, please submit evidence of permission to use that material. Submissions that contain copyrighted material but which do not include such evidence of permission to use that material will be automatically disqualified.
Videos should be in .mp4, .m4v, mov, or .wmv formats. Other formats will not be accepted. Videos should be between thirty (30) seconds and three (3) minutes. Per the application form, videos should be 20MB or less. NOTE: the online application form will not allow any file larger than 20MB.
Awards Available: 3
The NAfME Copyright Awareness Scholarship Program Sponsored by the MPA for 2012 (the “Scholarship Program”) is open only to those legal residents of the fifty (50) United States and the District of Columbia and individuals currently studying in one of the fifty (50) United States and the District of Columbia pursuant to a valid F-1 Student Visa who are between thirteen (13) and twenty-five (25) years of age at the time of application and who are currently enrolled in an accredited secondary school or post-secondary institution of higher learning (college, university or trade school). Students must supply contact of school official so that enrollment can be confirmed.
Current employees, officers, directors and agents of Sponsor and their immediate family members (defined as spouse, domestic partner, parents, siblings and children) are not eligible to win.
SELECTION OF POTENTIAL WINNERS: Sponsor is looking for Submissions that are well-constructed and clearly and creatively address the topic. On or about May 15, 2012, a qualified panel of judges will select three (3) potential winners. All applicants will be notified of their status via email.
4. PUBLICITY: By submitting an Application and Submission, Applicant (or, if a minor, his/her parent or legal guardian) agrees that Sponsor may, without any limitation or further compensation or notice, use his or her name, voice and/or likeness in any and all media, worldwide, for the purpose of advertising and promoting the Website, the Sponsor, the Scholarship Program, or any other promotion, contest or sweepstakes of the Sponsor.
5. OWNERSHIP: By submitting an Application and Submission, Applicant (or, if a minor, his/her parent or legal guardian) assigns to Sponsor the material submitted, including the worldwide copyright and any extensions, renewals, revivals, reversions and restorations thereof. Applicant agrees that Sponsor and its designees may exploit, edit, modify, and distribute the Submission and all elements of it in any and all media now known or not currently known, throughout the world in perpetuity without compensation, permission or notification to Applicant or any third party.
6. REPRESENTATIONS AND WARRANTIES/INDEMNIFICATION: Each person who enters this Scholarship Program represents and warrants to Sponsor as follows: (i) the Application and Submission, including any written, pictorial, audio and/or video content are the Applicant’s own original, previously unpublished, and previously unproduced work (except for any copyrighted material owned by third parties as to which all necessary permission to use such material has been obtained) and, as of the date of submission, are not the subject of any actual or threatened litigation or claim; (ii) the Application and Submission, including any written, pictorial, audio and/or video content, neither infringes upon nor violates the intellectual property rights or other rights of any other person or entity; (iii) the Application and Submission, including any written, pictorial, audio, and/or video content, does not and will not violate any applicable laws, and meets the Official Rules set forth herein. Each Applicant hereby agrees to indemnify and hold the Sponsor harmless from and against any and all third party claims, actions or proceedings of any kind and from any and all damages, liabilities, costs and expenses relating to or arising out of any breach or alleged breach of any of the warranties, representations or agreements of Applicant hereunder.
7. NO OBLIGATION TO USE: Sponsor shall have no obligation (express or implied) to use any winning Submission, or to otherwise exploit a winning Submission or continue the development, production, distribution or exploitation thereof, and Sponsor may at any time abandon the use of the winning Submission for any reason, with or without legal justification or excuse, and the Scholarship prize recipients shall not be entitled to any damages or other relief by reason thereof.
8. LIST OF SCHOLARSHIP PRIZE RECIPIENTS: The names of the Scholarship prize recipients and their winning Submissions may be posted on Sponsor’s Websites.
9. SPONSOR: The NAFME Copyright Awareness Scholarship is sponsored by The Music Publishers Association of the United States and the National Association for Music Education (NAFME).
Questions regarding the Scholarship may be directed to firstname.lastname@example.org.