Beginning Tomorrow, Student Loan Payments Will Become More Affordable for Millions of Americans
Washington, D.C. – Speaker Nancy Pelosi issued the following statement today on a new initiative that will take effect tomorrow, July 1, that will make student loans more affordable by allowing borrowers to cap their monthly loan payments based on how much income they earn. This initiative, the Income-Based Repayment program, in conjunction with a lower interest rate on need-based student loans and an increase in Pell Grant scholarships, will help make college more affordable for millions of students.
"Our nation´s economic competitiveness depends on young Americans having access to the highest quality education available, regardless of financial need. That is why it is so significant that tomorrow we are launching a new initiative that will cap student loan payments in light of a borrower´s income.
"The Income-Based Repayment program will ensure that educational debt does not prevent our best and brightest students from pursuing their dreams. It also prioritizes national service by accelerating debt forgiveness for borrowers who devote themselves to public-interest careers. We need our college graduates to choose careers based on their talents and skills, rather than on the size of student loan payments.
"I am proud that the 110th Congress passed the largest investment in student financial aid since the GI Bill in 1944, the College Cost Reduction and Access Act. In addition to creating the Income-Based Repayment program, that legislation increased the maximum amount for need-based Pell Grants and slashed interest rates on need-based federal student loans. We cannot let the rising cost of education prevent the next generation of American leaders and innovators from realizing their full potential. Congress will continue to work to make education more affordable for all Americans."
Negative equity hits one in six prime mortgages
Nearly one in six "prime" mortgages in the UK have fallen into negative equity, according to ratings agency Fitch. Households in Sunderland and Northampton are suffering most from the property crisis, it reveals.
Northern Rock has the most once-prime loans now in negative equity, said Fitch, with 32% of the mortgages in its controversial "Granite" book higher in value than the homes they are secured against.
The lender had specialised in offering 125% "Together mortgages" which combined a 100% home loan with a personal loan and were aimed at first-time buyers struggling to get on to the property ladder.
Bradford & Bingley, Birmingham Midshires and Alliance & Leicester – lenders the taxpayer has had to rescue – all have books of mortgages where one in five loans are in negative equity, said the report.
In a geographical analysis, Fitch found Northampton, Nottingham, Derby and Peterborough were the areas with the highest concentration of negative equity. In Northampton, 23.6% of mortgages are now bigger than the value of the property they were used to buy.
But it is a postcode in Sunderland, SR1, which is the UK's epicentre of negative equity. Fitch said that in the SR1 part of the city 43.7% of mortgages (by value) are higher than the current price of the property, and 28.1% by number.
On average, the debt over and above the mortgage in SR1 is just under £6,000. In contrast, in the Cambridgshire towns and villages covered by the postcode CB25, where 27.6% of mortgages are in negative equity, the average amount is £13,369.
Eurozone banks gear up for landmark ECB loan offer
FRANKFURT (AFP) — Eurozone banks were expected to flock on Tuesday to an unprecedented loan offer at the European Central Bank, hungry for hundreds of billions of cheap euros (dollars) in what looks to be a landmark event.
The ECB said it would lend an unlimited amount of the single currency to banks for a full year for the first time at a record low rate of 1.0 percent, a move Goldman Sachs chief economist Erik Nielsen called monetary "easing by stealth."
The central bank has resisted the so-called quantitative easing practiced by the US Federal Reserve and Bank of England -- essentially printing money to buy government and private debt to boost recession-hit economies.
But the ECB has generated a flood of cash through loans that will now extend to 371 days, or 12 months, from three or six months in the past.
A previous one-day record of 348.6 billion euros (485 billion dollars) set in December 2007 could easily be surpassed, with Nielsen expecting a total of around 500 billion this time around.
Results of the operation were to be unveiled Wednesday, and many analysts reckoned banks would leap at the chance to get an unlimited one-year loan at the ECB's lowest rate ever.
The central bank has said that in subsequent one-year operations -- the next is scheduled for September 29 -- the rate could be higher depending on market conditions.
The practice of carry trades involves borrowing a currency at low rates to exchange it for another in which one can invest at higher rates.
By providing huge amounts of cash to commercial banks, the ECB aims to lower the cost of borrowing by companies and individuals, and spur economic activity.
Money markets influenced by central bank operations determine the availability of credit for vast numbers of people around the globe, from managers trying to fund their businesses to families and students seeking mortgages and personal loans.
