Such a Deal for You — The Fine Print of Obama’s College Loan Plan

Check out my op-ed piece on Fox News about the fine print of Obama’s college loan plan. I hope you enjoy it. If you have any comments, please be sure to leave them below!

About Chuck Bentley

CEO, Crown Mininstries
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One Response to Such a Deal for You — The Fine Print of Obama’s College Loan Plan

  1. John R says:

    Greetings Mr. Bentley (and fellow readers),
    I was interested in reading this article as I’ve been curious about the details of this plan since President Obama announced his executive order. I know that you seek feedback, and there was one statement (or mis-statement) that caught my attention and led me to write this post.
    In your article, you state: “The so-called student loan bailout would reduce the maximum monthly payment from 15% to 10% of discretionary income —resulting in less than $10 savings per month for the average student loan borrower, according to The Atlantic magazine.” As I read this, the logical connection between the two statements implies that the reduction in monthly payment from 15% to 10% of discretionary income would translate to less than a $10 reduction in the payment. That struck me as odd, and didn’t seem to make sense. A 5% reduction on $200 would result in $10, and I’m certain we’re talking about college graduates making more than $200 in discretionary income.
    So, I went searching to learn more; specifically, I tried to find The Atlantic magazine article you cited. I then found two articles.
    The first article, “Obama’s Student-Loan Order Saves the Average Grad Less Than $10 a Month” (http://www.theatlantic.com/business/archive/2011/10/obamas-student-loan-order-saves-the-average-grad-less-than-10-a-month/247411/), gives the $10 a month savings but ties it to the reduction in interest when consolidating loans. Specifically, the article states, “How much would an interest rate reduction of up to 0.5% affect payments?… Using these values as the high and low bounds of average student debt over the last ten years, the monthly savings for the average student loan borrower would be between $4.50 and $7.75 per month.” However, as stated, this is a different part of the plan than you cited regarding reducing the percentage of the monthly payment.
    The second article, “Who Qualifies for Obama’s 10% Student Loan Payment Cap?” (http://www.theatlantic.com/business/archive/2011/10/who-qualifies-for-obamas-10-student-loan-payment-cap/247470/), gives a more specific analysis of reducing the monthly payment. The article states, “Under the new law, the calculation would be almost identical. The difference is that the cap is now at 10%, instead of 15%. That makes your annual maximum student loan payment $2,367 or $197 per month. You could pay up to $100 per month less in this example, compared to the old system.” So, there is the potential for larger savings, however, there are a complicated set of rules as described in the article.
    As I mentioned, I wanted to provide you feedback on this statement and to clarify this point that may cause confusion. I greatly appreciate your work and have been blessed by it. Thank you for your ministry!
    Sincerely,
    John R

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