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Here's a closer look at some provisions of the bill, sponsored by Rep. George Miller, D-Martinez, and Sen. Edward Kennedy, D-Mass.:
Stafford loan rates: The bill would reduce the interest rate on subsidized Stafford loans by half over four years. Subsidized loans go to students who demonstrate financial need.
The rate cut would be phased in starting July 1. It would go from 6.8 percent today to 3.4 percent by 2011. In 2012, it would jump back to 6.8 percent unless Congress intervenes.
The rate cut only applies only to new subsidized Stafford loans, not ones that students have already taken out. It does not apply to unsubsidized Stafford loans, which students can take out regardless of financial need.
Income-based repayment: Starting July 1, 2009, borrowers would not have to devote more than 15 percent of their discretionary income to repaying Stafford student loans. This applies to both subsidized and unsubsidized Stafford loans, regardless of when the loans were taken out.
If a borrower is making reduced payments on a subsidized loan, the government will pay the unpaid amount for up to three years. After that, the unpaid amount will be added to the loan balance.
For unsubsidized loans, all unpaid amounts will be added to the balance.
After 25 years, all borrowers who are in this income-based repayment program will have any remaining balances forgiven.
The new program means "you don't have to hold back from taking a job teaching or being an entrepreneur" because you can't repay your loans, says Robert Shireman, executive director of the Project on Student Debt.
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