By Mark Hosenball for The Washington TimesA federal loan guarantee program is supposed to help students afford college, but students are often left out in the cold.
Now a group of nonprofit students are launching a new program that offers loan guarantees to help borrowers pay for tuition, fees and room and board at community colleges and other institutions.
The program, which the nonprofit Student Loan Justice Center has called The New Student Loan Guarantee, is being touted as a way to fill a huge gap in the student loan market, which has been shrinking.
But students and some experts are concerned about how the program will work.
The program, called The Student Loan Repayment Act, would give borrowers $50 billion over the next decade in loans for their college educations.
The federal government would provide the loan guarantees for borrowers who qualify.
The loans would be paid for with an annual installment payment of at least $1,200.
The amount is based on the borrowers current income and family size.
The program has attracted bipartisan support from lawmakers, including Senate Finance Chairman Max Baucus, Democrat of Montana, and House Education and Labor Chairman John Kline, Republican of Minnesota.
The law’s supporters say the program would provide relief to borrowers with a lot of debt, many of whom have attended private colleges or who have not attended college.
But critics, including advocates of student loan debt relief, worry that the loans would likely be used for interest payments that would make borrowers worse off and that the borrowers would be saddled with more debt over time.
The student loan program, according to the program’s website, has been a mainstay of President Barack Obama’s economic stimulus program, and has been used to help tens of millions of Americans pay for higher education.
But for many students, there is little hope that the program, launched under Mr. Obama, will help them pay off their loans.
They have heard that the cost of a degree will go up because of the student loans program, but they don’t understand that, said Jennifer Coughlin, a 28-year-old University of Minnesota student and the co-founder of the Student Loan Law Project.
Many borrowers are working at night or on weekends to make ends meet.
For some, it can be challenging to pay the bills on time, and it is more difficult for them to save for a down payment.
Coughlin is the cofounder of The Student Loans Law Project, which is the lead organization of student borrowers in the country.
It is funded by a $1 million grant from the National Association of Student Financial Aid Administrators.
She said her group was not involved in the legislation to create The Student Aid Repayments Act, but hopes to see it passed in Congress.
The Student Loan Responsibility Act, passed in May by Congress, gives borrowers with student loans up to $25,000 a year to refinance their loans if they don�t make a monthly payment of more than $600.
The interest rate is 0.25 percent.
But the bill also would give the borrower more options, including forbearance.
The loan forgiveness program, if approved, could also include forbearance on any federal student loan.
In the meantime, borrowers have faced long waits for a refinance.
Students who have been paying off student loans are paying more on average than those who haven�t, according with a report by the American Association of University Women.
Some students who have had to wait months or years for a refinancing have seen their repayments decrease from a year ago.
Couglin said the program is important because borrowers have little incentive to get on track.
“If you�re paying off your student loans for six months, and then you can�t afford the tuition, then you don�trick the system,” she said.
To be eligible, borrowers must be enrolled in a four-year college or graduate school.
Currently, student borrowers can only refinance loans through private lenders, which charge a rate of about 2.5 percent.
If the loan is approved by the Department of Education, the borrower would have to pay a 1.5-percent fee to a private lender.
The Federal Reserve Board has said it would likely extend the federal student lending program through 2020.
Coughlins group is a member of a coalition that is working on legislation to extend the program.
One of the cofounders of the coalition, Laura Loomer, a student at the University of Delaware, said the Student Aid Law Project was created with students in mind.
There are more than 400,000 students on the federal government�s student loan rolls.
Most of them attend public universities and can afford to repay their loans, Loomers said.
She said the groups goal is to get the federal lending program extended beyond 2020 and to help the federal budget by eliminating the student debt that students have to carry around.
That is one of the goals of the bill to get more people to refortify their loans and to