The Obama administration is paying special attention towards students and in order to promote college education, new plans have been introduced to help college students. According to this plan, paying accumulated debt throughout college will be more affordable—including smaller payment requirements at a minimal interest rate.

The new administration realizes that more than 65 percent of college students are getting loans to pay for their higher education. Therefore in order to help them, it has been decided that they will be given the opportunity to repay loans at a rate dictated by income and family size.

Although students will have to wait until July 1, 2010, the good news is that there are potential plans that include canceling the remaining balance on the loan after 25 years and forgive loans for people who work in public service after 10 years.

But along with the good news, there is some bad too. Before students consider the smallest payment plan or switch majors to enter the public service industry, such forgiveness will result in accumulated interest and may draw attention from the Internal Revenue Service. Michigan students, in conjunction with peers nationwide, will not be exempted from the IRS as forgiven debts are generally considered taxable income.

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CORNWALL – New college student loan benefits took effect on Wednesday. These loans were approved by the last Congress and signed by former President Bush, and they were outlined by Congressman John Hall at a Cornwall High School news conference.

It was said by Hall that the law lowers interest rates on college loans.

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A good news for past, current or future loan takers with a new amendment to renegotiate your monthly student loan repayment bill to a maximum 15% of your discretionary income.

These new benefits will be affected from 1^st of July. This will regulate the student loan payments for millions of Americans. These benefits were signed into law in 2007 as part of College Cost Reduction and Access Act. They include:

• Low interest rates on need-based (subsidized) federal student loans. From 1^st of July the interest rates on subsidized federal student loans will decrease from 6% to 5.6%. That’s 2^nd from four annual cuts in this interest rate and it will continuously decrease down to 3.4% till 2011.

• Affordable monthly college loan payments plan for borrowers. The implementation of this new Income-Based repayment program will be effected from 1^st July, which allows borrowers to pay just 15% of their discretionary income (15% of what a borrower earns above 150% of the poverty level for their family size). The current or future borrower whose loan payment will be greater than 15% of their discretionary income is eligible. After 25 years in the program borrowers debts will be completely forgiven.

• Pell Grant scholarships covering the average tuition at public universities. The maximum Pell Grant scholarship for the 2009/2010 school year will be $5,350 which is $600 more than last year’s award and funding will be provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act. Read the full story