The majority of college students graduate with more than a degree– they also leave school with a big pile of debt. Here are some recent statistics:
- Two out of three four-year undergraduate students left school with a degree and debt.
- The average student graduated with $23,186 in debt.
- Average debt has increased by $1,139 or 5.6% each year since 2003-2004.
Along with changes to health insurance, the Health Care and Education Reconciliation Act includes a lot of changes for education. “It’s the right legislation at the right time and we couldn’t be more pleased that it passed,” said Secretary of Education Arne Duncan in a live webcast. Here’s a look at the main changes.
- Increase in Pell Grants
Under the new legislation, more Pell Grants will be handed out to college students. These are like student aid that doesn’t need to be paid back. The maximum Pell grant will gradually increase beginning in 2013. “With the passage of this legislation [come] dramatic increases in Pell Grants, about $36 billion over the next decade,” said Secretary Duncan. - More Money for Minority-Serving Institutions
Statistics show that Historically Black Colleges and Universities and Minority Serving Institutions serve nearly 60% of minority undergraduate students. These schools will receive an increase in funding for services and programs under the new legislation. - Lower Income-Based Payments
Graduates sitting with debt now won’t receive any relief, but after 2014 those who struggle to pay back their loans will get some help. Under the new rules, loan payments cannot exceed 10% of the borrower’s discretionary income, down from the current maximum of 15%. That’s a reduction of about $110 a month for the average borrower. - More Forgiveness Opportunities
Starting in 2014, borrowers who stick with their income-based payment plan for two decades will have their loans erased. That’s five years less than the current plan. To encourage more people to go into the public sector, those loans will be wiped out in half the time. “If you go into the public service, teaching, military or work for a not-for-profit or governmental agency after ten years all of those loans will be erased. So it’s a huge opportunity for people to follow their heart,” says Duncan. “We’re really trying to remove those barriers and get that next generation of great talent to serve the public.”
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