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College Planning Network gives area students, parents hope for funding

Doug Breithaupt, of the College Planning Network, discusses funding sources for college at the Arlington Library Jan. 6. -
Doug Breithaupt, of the College Planning Network, discusses funding sources for college at the Arlington Library Jan. 6.
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ARLINGTON Students and parents looking for ways to pay for higher education received a message of hope from Doug Breithaupt, of the College Planning Network, at the Arlington Library Jan. 6.
The College Planning Network is a Seattle-based non-profit organization which provides information on college selection, admission, financial aid and scholarships, and Breithaupt discussed funding sources for college.##M:[more]#
More than 50 percent of these sources are loans, but Im here to tell you the best news on that front in 30 years, Breithaupt said. The College Cost Reduction Act of 2007 will cut nearly $21 billion in government subsidies to lenders over the next five years. Almost all the money will be plowed back into grants for the poorest students, lower interest rates and loan forgiveness for those in careers that society values but underpays.
Breithaupt advised students to apply for grants and scholarships instead of loans, whenever possible, since grants and scholarships dont have to be paid back. Pell Grants are where the largest percentage of money from the College Cost Reduction Act will go. The previous maximum grant amount of $4,310 will increase to $4,800 within the year, and will continue to grow until it reaches $5,400 in 2012.
For those who must take out loans, Breithaupt noted that the College Cost Reduction Act will lower the fixed rate on subsidized Stafford loans for undergraduates, now set at 6.8 percent, to 3.4 percent by July of 2011.
The typical student with $10,000 in subsidized loans will save $1,000 in interest over the life of those loans, said Breithaupt, who explained that subsidized loans are those on which the government pays interest while students are still in school. That fixed rate will revert to 6.8 percent on new loans in 2012, unless Congress extends the reduction.
Breithaupt also offered encouragement to those studying to become teachers, since they can now potentially qualify for grants as much as $4,000 a year, for a total of $16,000.
These grants do come with some strings, Breithaupt said. Recipients will have to teach a subject in high demand, such as math, science, special education or a foreign language. They must also commit to teaching at least four years in an area where there is a shortage of teachers.
Breithaupt warned his audience that recipients only have eight years after they graduate to fulfill their obligations, or else their grants will convert to unsubsidized student loans, on which they will owe both the principal and the accrued interest.
Lenient repayment plans will be made available in July of 2009, which will essentially limit payments to no more than 15 percent of graduates discretionary income. Breithaupt pointed out that this can lower monthly payments significantly for students with low incomes and high debt.
With lower payments, borrowers get more time to repay, Breithaupt said. After 25 years of making payments, any unpaid debt is forgiven.
Graduate and undergraduate loans can be forgiven even faster, after only 10 years, for those in a wide range of public service careers, including police officers, social workers, school librarians, government employees, members of the military, public defenders and prosecutors.
Forgiveness will benefit those in the income-based repayment plan who are taking longer than the standard 10 years to repay loans, Breithaupt said. To be eligible, a loan must be a federal direct loan, and not through a private lender. Students whose schools werent in the direct-lending program can still be eligible for forgiveness by consolidating their loans through the direct-lending program. Even those who already consolidated can do so again to take advantage of the forgiveness program.
They must also make 120 monthly payments on their loans while in public service, and payments only count from October of 2007.
Breithaupt invited those with questions to log onto www.collegeplan.org.

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