Student-loan forgiveness may be overstated

President Obama announced Monday that he is expanding, by executive order, a program that caps certain federal student loan payments at 10 percent of discretionary income and forgives the remaining balance after 20 years. But the White House "fact sheet" neglected to provide a key fact: who qualifies for the expanded program.

The secretary of education must implement the expansion, and it is not likely to be available until December 2015.

The program, which started in 2012, is called Pay as You Earn. It is only available to borrowers with federal direct student loans (those made directly by U.S. Department of Education) who took out their first such loan after Sept. 30, 2007, and took out at least one more after Sept. 30, 2011. Parent loans do not qualify.

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If borrowers qualify for the program, their loan payments are capped at 10 percent of discretionary income, which is defined as the amount of adjusted gross income that exceeds 150 percent of poverty level for the borrower's household size. After 20 years of payments under this program, any remaining debt is forgiven. The amount forgiven is subject to income tax.

Federally backed loans made under the old Federal Family Education Loan program, which ended after June 30, 2010, are not eligible, unless they are converted into a federal direct consolidation loan. Private student loans are not eligible, period.

To qualify, borrowers also must have a large student debt relative to their income. If your standard 10-year payment would be more than your payment under the program, you probably qualify, says Lauren Asher, president of the Institute for College Access & Success.

A White House fact sheet says the expansion "will help up to 5 million borrowers," but it did not say how the rules are changing, so it's hard to say who will benefit.

"They are being light on the details," Mark Kantrowitz, publisher of Edvisors.com, said in an e-mail. "I expect that they will change one or both of the current eligibility dates. If I had to guess, (they are) probably moving the 10/1/2011 date perhaps back to 10/1/2007, since that would be consistent with 5 million borrowers."

He predicts that only a fraction of the 5 million borrowers who may qualify based on a date change will meet the income requirements. "It sounds more glamorous than the reality," Kantrowitz says. Five million "is a dramatic overstatement of the number of borrowers who will participate."

Some borrowers who do not qualify for Pay as You Earn could still qualify for other income-based programs such as Income Based Repayment or Income Contingent Repayment. Borrowers who work for a nonprofit or government employer might qualify for reduced payments and forgiveness of remaining debt after 10 years under Public Service Loan Forgiveness.

Borrowers can estimate their federal student loan payments under various repayment plans at http://1.usa.gov/19S8Yr1.

Student loan experts hope Obama's announcement will raise awareness of these existing programs, which are underused (maybe because the rules are too complex).

Millionaires galore: At the other end of the income spectrum, the number of millionaire households worldwide grew to 16.3 million in 2013 - up by 2.6 million or 19 percent from the year before, according to a report released Monday by the Boston Consulting Group.

Between 2011 and 2012, the number of millionaire households grew by 12.2 percent.

Millionaires now account for 1.1 percent of all households globally, according to the 14th annual report, based on proprietary research by BCG. The research only looks at financial assets such as stocks, bonds and cash held by households. It excludes real estate, commodities and other nonfinancial assets.

The United States had the most millionaire households last year (7.1 million), as well as the highest number of newly minted ones (1.1 million).

However, when it comes to wealth per capita, Qatar takes the top spot, with 17.6 percent of households achieving millionaire status. It was followed by Switzerland (12.7 percent) and Singapore (10 percent). The United States ranked seventh in millionaire density (5.9 percent).

The report attributed the big increase in millionaires to the global stock market recovery that started in mid-2012. Almost all major stock indexes worldwide rose last year, including the Standard & Poor's 500 (up 17.9 percent), Japan's Nikkei 225 (56.7 percent) and the Euro Stoxx 50 (14.7 percent).

One exception: the MSCI Emerging Markets Index fell by 5 percent.

Nevertheless, the number of millionaires in China rose to 2.4 million in 2013 from 1.5 million in 2012, solidifying its position as the second-wealthiest nation.

The report predicts that China will continue to narrow the gap between itself and No. 1.

In 2013, the United States had $46 trillion in personal financial wealth and China had $22 trillion. By 2018, it expects those numbers will be $54 trillion for the United States versus $40 trillion for China.

The firm estimated that global private financial wealth grew by $19.3 trillion - or 14.6 percent - to $152 trillion in 2013, and that one-third of that wealth was held in North America. Of that growth, $14 trillion came from gains on existing wealth and $5 trillion represented "real new wealth created," says Anna Zakrzewski, a principal with Boston Consulting Group.