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Earlier this year Kennedy reintroduced
the Student
Debt Relief Act, which supports measures passed by the House, including halving
student loan interest rates on subsidized undergraduate student loans and increasing
Pell Grant awards. It also gives the borrower an option to cap loan payments at
15 percent of the borrower's discretionary income and forgives student loan debt
altogether after 25 years. For students who choose careers in the public service
sector, such as in law enforcement or teaching, loans would be forgiven after
10 years. And there are other provisions that watch the backs of student loan
borrowers too numerous to mention here.
Of course, no one knows right now whether these or
other regulations will be enacted to enhance borrower protections. So that means
only one thing: Borrowers must protect themselves. That means
don't assume that a lender offers good terms just because it's on your school's
preferred lender list. Don't assume the terms offered by one lender are just as
good as those offered by another. And never assume that your best interests are
uppermost in lenders' or financial aid administrators' minds. Rather,
approach getting a loan as you would prepare for an African safari. Read as much
literature as you can get your hands on. Ask a lot of questions. For sample questions,
read Bankrate's article on Shopping
for the best private student loans. Also read Andrew Cuomo's student
lending brochure. Most importantly, read the loan agreement you're thinking
about signing. If you don't understand something, be sure to ask a guide -- someone
who really does have your best interests at heart. Mom, maybe? Uncle Larry, the
lawyer? And be on the lookout for snakes. This homework for
students and their parents is more important than the typical school assignment
because taking out a loan has lasting repercussions. It may take many years and
thousands of dollars in interest to satisfy the obligation. Longtime
financial journalist Barbara Mlotek Whelehan earned a certificate of specialization
in financial planning. If you have a comment or suggestion about this column,
write to Boomer Bucks. | 
