Obama’s Student Loan Plan: Will it Help Open Books or Only Wallets?
by Abigail Geiger | University of Missouri
President Barack Obama announced Wednesday a new executive plan aiming to help college students avoid the crushing weight of notoriously interest-heavy loans, repayments and debt.
As college tuition rises across the nation, students have become increasingly hampered and crushed by the repayments from student loans they take out to get an education.
“About 1.6 million Americans could see their payments go down by hundreds of dollars a month,” Obama said to an audience at the University of Colorado’s Denver campus, referring to the benefits of his plan. “And that includes some of the students here today.”
This new motion, in light of several strong executive actions taken without consent of Congress, seems to show Obama’s campaign’s interest in revitalizing the younger U.S. population’s support just as it did in 2008.
Currently, students are allowed to limit their loan payements at 15 percent of their discretionary income. In this new plan, Obama seeks to speed up a plan passed by Congress last year to let college graduates cap loan repayments at a lower 10 percent, and have remaining debt waived after 20 years.. Moreover, the plan’s ultimate goal is to help graduates reduce their payments, save money, and take control of and gradually eliminate their loan debt.
Yet, students are skeptical of the president’s post-secondary educational gesture.
Florida State University sophomore Stephanie Wels has taken out loans since her freshman year.
She said that despite the good intentions of the decrease in income-based repayment, she believes the long-term effect of such a plan would only make companies elongate deals with students, which would in turn make the overall amount higher.
“Being an economics major, I’m constantly worrying about it,” Wels said of her debt from loans. “I can’t just shrug it off.”
John Corker, medical student at Wright State University and health care correspondent for NextGen Journal, said Obama’s definition of discretionary income needs to be specified, as this will greatly affect the actual aggregate savings made.
Corker also said graduate students would be negatively impacted by such a plan. He said because Obama eliminated subsidized federal aid for graduate students, he effectively weighed down the debt burden on graduate students who rely on federal aid.
Corker said from a non-student’s perspective the plan contradicts the debt bill’s goal to decrease federal spending and debt.
“Why are we now passing further legislation to neutralize those savings?” Corker said. “In effect, why did we waste time passing two pieces of legislation that will have a net zero effect on reducing our run-away debt?”
Obama also said he would like to have an economic fact sheet to give to students looking to take out loans for school. He said it would be called the “know before you owe” sheet.
Obama said in his speech that he wished he could have had assistance as a young man and that this plan would help young people make the right decisions that come with such unforgiving economic weight.
“I’m just trying to find a job so badly,” Wels said. “My loan debt has definitely made a huge impact on my education. It’s always hanging over my head.”Abigail Geiger, a journalism student at the University of Missouri-Columbia, writes for the school’s student-run newspaper, The Maneater, and co-runs a Tumblr news blog, The Collegiate Voice, with a friend. She has interned locally near her home in Arlington, Virginia and plans to work in nearby D.C. as her career progresses.