John Michael Schott is in the middle of paying his loans back. He says his education was worth the burden of debt "as opposed to oh, I had to put this on the credit card or what have you because those are for the most part options that you can live without, but my degree, I've got it. I need to get it paid for,” said John Michael Schott, JMU Loan Program Adviser.
To him, the repayment process is just a part of finishing his education. "It's making sure I have paid for my education,” said Schott, “and finishing that up."
He went to school to increase his odds of getting a good job for his future, repayment on student loans will also increase those odds. "So by repaying my student loans on time,” said Schott, “I am keeping my credit rating good in spite of the awful economy right now."
Many graduates are not as well off. Student-loan default rates have been climbing for several years. Financial aid experts at JMU say that can be devastating to a graduate's future. "Repercussions of a defaulted loan are pretty severe,” said Brad Barnett, Director of JMU Financial Aid, “especially in the Federal Student Loan Program. The government does not have to sue you or take you to court to garnish your wages."
Obama says his plan will prevent many borrowers from defaulting. "So what this does, is allow for students who are in low income fields or professions to have their loan debt forgiven much earlier than under the way the current plan is," said Barnett.
The President's Plan would speed up a measure passed by congress that wasn't supposed to take effect until 2014. It would reduce the maximum required payment for student loans to just ten percent of the graduate's annual income. The plan would also forgive student loans after 20 years starting in 2012.
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