New federal laws for student debt

A news release from the office of Rep. Earl Pomeroy, D-N.D.:

A new law that takes effect tomorrow will strengthen assistance for higher education, allowing more North Dakotans to pursue a college degree. The changes were approved by Congress earlier this year in the Student Aid and Fiscal Responsibility Act.

Even as the importance of higher education in the work force rises, college has become less affordable nationwide as tuition and fees outgrow income. In North Dakota, 70 percent of students leave college with some debt – the sixth-highest proportion in the nation. Of those students, the average debt load is $20,625.

Beginning July 1, new federal laws take effect that will make it easier for students to repay their debt:

Interest rates will be lowered. The fixed rate for new Subsidized Stafford loans drops from 5.6 percent to 4.5 percent for undergraduates, and federal Grad PLUS and Parent PLUS loans will have rates of 7.9 percent, less than many had previously.

Repayment won’t break the bank. After July 1, needed fixes will be made to the Income-Based Repayment program, which caps monthly student loan payments based on household income. Individuals who make their payments regularly and faithfully will have any remaining balance forgiven after 25 years.

More assistance will be available. The new law will expand the Pell Grant program to another 1,900 North Dakota students, and increase the maximum annual scholarship from $5,350 to $5,550 immediately. It will eventually rise to $5,975 by 2017.

Community colleges will get a boost. The new law will provide at least $10 million in additional support for North Dakota community colleges over four years.