How Clinton’s College Proposal Affects Your Medical Student Loan

by Emily Geitner on Sep 21, 2015 6:00:00 AM

How Clinton’s College Proposal Affects Your Medical Student Loan

According to the Consumer Financial Protection Bureau, student loan debt in America has passed the $1.2 trillion mark, with $1 trillion of that in student loans guaranteed or held by the federal government.

Hillary Clinton recently announced her new $350 billion college plan which aims to ease the crippling burden of student debt in this country.

Hillary Clinton imagines “what is possible in America if we tackle the runaway costs of higher education, make sure that students who start college can finish with a degree, and relieve the crushing burden of student debt: families that can send their sons and daughters to college, graduates who can buy homes and start businesses without being held back by loans, and student parents who can balance the costs of quality child care with returning to school.” 

Today, we explain what you should know about Clinton’s new plan and talk about how it affects your medical student loan.

The two main parts of her plan are debt-free tuition and refinancing student debt.

Debt-Free Tuition

Under the Clinton plan, the federal government would send large grants to states, which would ensure students can pay tuition without taking out loans.  

However, there are certain stipulations. 

States would be required to increase their allocations to higher education and schools would face new constraints on spending. 

Families would have to make a realistic contribution based on what they could afford, and students would be required to work 10 hours per week.

In addition, the lowest-income students would be newly allowed to use Federal Pell grants to cover costs such as room and board.

Other students could have those expenses covered as well if they complete community service and take a public-service job.

Mrs. Clinton’s plan also calls for two years of free community college. 

Together, this portion of the plan would cost about $200 billion over 10 years. 

Clinton’s campaign also anticipates another $25 billion for historically African American colleges/universities and other schools with modest funding.

Refinancing Your Medical Student Loan

The second part of Clinton’s plan is to lower borrowing costs for both those who already hold student debt as well as future borrowers.

This portion of the program is estimated to cost $125 billion over 10 years. The entire plan would be paid for by capping deductions available to high-income taxpayers.

If you have student debt, you would be able to refinance your loans at current rates through the federal government, with an estimated 25 million borrowers receiving debt relief.  Typical borrowers could save $2,000 over the life of their loans.

Future borrowers would receive significantly lower interest rates reflecting the government's low cost of debt.

All borrowers would be able to enroll in a simplified income based repayment program which would cap payments at 10 percent of their discretionary income. 

If any money is still owed after 20 years, the debt would be forgiven. 

Refinancing is when you apply and become approved for an entirely new loan with a different interest rate, maturity schedule, and schedule of monthly payments.  Under Clinton’s plan, your new lender would effectively pay back your existing student loan(s) and issue you a new loan at a lower interest rate, with a lower required monthly payment. 

If you’re a medical school graduate with a substantial student loan burden, in a residency or fellowship, or are on staff with a health system, hospital, or medical practice, you may be a good fit to refinance through LinkCapital

Link refinances all qualified medical student loans. If you’d like to better understand what’s involved in refinancing your medical student loan or have questions about how to reduce your monthly student debt, please contact a LinkCapital Loan Specialist at (844) 226-LINK. We’re here to help you make better decisions when it comes to managing your student debt.

photo credit: Major Economies Forum on Energy and Climate via photopin (license)

 

 

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This post was written by Emily Geitner

Emily is Director of Operations & Marketing for LinkCapital and responsible for managing the company’s day-to-day operations as well as leading strategy, marketing, and user experience for all Link consumer products.