Obama consolidating loans
So starting in the 1970s and 1980s, Congress created a series of alternatives.Loans can be put into “deferment,” which means temporary permission to skip payments without accruing penalties or damaging your credit rating.The first thing to know about the forgiveness program is that Congress did not, initially, want all public servants to receive it. In practice, President Bush signed the forgiveness program into law on Thursday, Sept.Instead, lawmakers limited eligibility to people with a particular kind of loan, called a Direct Loan. L.), under which the federal government paid private banks to lend students money and then reimbursed banks for 98 percent of any loans that went bad. 27, 2007, as part of a larger package of overhauls that received relatively little news media attention.
The program, though, appears to be a spectacular failure.In short, there’s a very good chance that they would at some point in the next decade make ineligible payments, or no payments, or that the eligible payments they did make would be on an ineligible loan. Loan servicers are paid a flat rate per borrower for processing loan payments and helping people navigate the repayment process.That means that the more time and effort a borrower requires, the less money the servicer makes.So Congress created the “graduated” plan, in which, instead of equal-size installments, payments start small and grow over time.There’s also the “extended” plan; the payment period lasts longer than 10 years. That still left people who were flat broke or unemployed or who needed to spend their money on other things, like children or food or rent.
Otherwise they wouldn’t have a balance left to forgive 10 years later.