The Terrifying Impacts of a rate increase on Subsidized Student Loans, may not be so harsh for current students because of a little-known program found on White House web-siteTheodore B. Shull July 6, 2013

United States Senators and Representatives alike, from both parties, have spoken out in national media outlets, pointing fingers at each other and blaming this current impasse on whatever political party they were not a part of. Each political party has stated that their prospective plans are the best, and that the failure to reach a compromise before the Fourth of July Congressional Recess could have dire consequences for current students if the rates are not lowered by August, when most student loans are issued for the following academic year.

These media reports worried me because I also depend on a Stafford Loan, subsidized by the Federal Government as part of my Financial Aid Package. “Congress’ Joint Economic Committee estimated the cost passed to students would be about $2,600” reported by Phillip Elliott of the Associated Press. It was in the process of gathering research for this article that I discovered one story on the PBS-News Hour from 2012, which gave much more in-depth information about student loan debt and repayment, and an important Executive Action taken by President Obama that most student borrowers simply don’t know about

Many of the protestors with-in the Occupy movement, both on Wall Street and in Washington, D.C., tried to get public support for an overhaul of the destructive system of student debt servitude. Many of them were recent college graduates with a frightening burden of federal debt, but according to activist Mark Kantrowitz of FINAID.ORG who was interviewed by PBS, these

recent graduates are probably eligible for Federal Programs that would assist former students in paying off their debt or forgiving the debt entirely, based on the borrower’s income level after graduating. According to Mark Kantowitz only 2.25% of eligible borrowers are taking advantage of this program, which is based on the graduate’s income, and is capped at 10% of discretionary income, and at the end of 20 years of repayment, the debt is forgiven – 10 years if the borrower is employed in the public sector.

This Improved Income Based Repayment (IBR) program is proudly listed on the White House’ “We the People” website, but the vast majority of recent graduates and current students are completely unaware of this important program. The initial program begin in 2009 and capped payment at 15% of discretionary program for a period of 25 years, and last summer President Obama issued an Executive Action, which put all Federal Student Loan debt incurred in 2012 and beyond to be capped at 10% of discretionary income, and an individual who makes $17,500 as a single tax payer would have a payment of 0 per month.

This little-known program of Income Based Repayment seems to make all of the doom and gloom that our national media outlets predict because of partisan bickering in Congress seem a little less worrisome for today’s students. But this Federal assistance program must receive more national media attention because it becomes much more difficult for student borrowers to receive advice on repayment options after graduation. Out of the 37 million people who are sidled with student loan debt, only 600,000 people are currently utilizing this program, which began as a petition on the White House website that received 32,000 signatures in 2009, and the new version implemented in 2012 received 950,000 signatures by citizens who have transformed our future loan repayment options.