President Barack Obama speaks to supporters during a campaign fundraiser in Orlando, Florida, Oct. 11.
With an election on the way and an approval rating at an all time low, President Barack Obama is on the road sharing the White House’s plans to help offer relief to graduating college students. The White House Administration issued a press release Oct. 25 stating it is moving forward with the “Pay as You Earn” proposal, a plan to lower student loan payments.
“College graduates are entering one of the toughest job markets in recent memory and we have a way to help them save money by consolidating their debt and capping their loan payments,” said U.S. Secretary of Education Arne Duncan in a White House Press Release. “And we can do it at no cost to the taxpayer.”
Obama has been touting two measures of the proposal in recent appearances around the country. One of the President’s proposals is to push up the start date on more favorable terms on a special loan repayment program based on income. The other measure suggests graduates with two or more kinds of federal loans consolidate their loans to get a small tax break.
These two measures are just the beginning, and with a lack of support from Congress United States Secretary of Education Arne Duncan told CNN, “We’re just going to do this by ourselves. We can’t wait for Congress. [This] is about putting more disposable income in people’s pockets and helping them pay the rent or buy groceries or pay the electric bill. By reducing that debt each month (and) lowering those payments, we’ll reduce default rates for the country.”
Current laws allow students to limit their loan payment to 15 percent of their discretionary income and any remaining debt is forgiven
after 25 years. Last year, Obama and Congress were able to get a plan proposed and enacted to lower student loan debt payment by lowering the Income-Based Repayment Plan (IBR) loan payment to 10 percent of income and the forgiveness timeline to 20 years, according to the White House press release.
This change goes into effect for all new borrowers after 2014.
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