What Does President Obama’s Student Loan Plan Mean?
Ah, the woes of funding higher education. As every college student knows, the costs of higher education have risen dramatically over the past few years; even in graduate programs online and other nontraditional programs that are usually less expensive. What’s more, there’s no end in site to the increasing prices of tuition, student fees, and housing. While education remains important (college graduates are currently experiencing much lower unemployment rates than those without a degree), the thought of graduating with piles of student debt has led many to question their decision to attend college. The total of America’s student debt has passed $1 trillion, which is more than the total of the nation’s credit card debt! Indeed, a large percentage of those supporting the Occupy Wall Street movement are doing so because of their frustration with crippling student debt.
As rare as it may seem, Washington has been listening. At the end of October, President Obama announced a plan aimed at reducing the pressure of student debt. This plan reduces the maximum required payment on student loans from 15% of discretionary income to 10% of discretionary income. Further, the plan will allow remaining student debt to be forgiven after 20 years (the current debt forgiveness period is 25 years). Lastly, the plan would provide a low interest rate debt consolidation program for federal loans.While these changes were set to happen in 2014 anyway, President Obama is pushing for them to take affect next year instead.
So what does this mean for current students, as well as those who have already graduated? The White House estimates that over 7 million borrowers will be affected by this plan, to the tune of a few hundred dollars per month each. Perhaps more importantly, however, this plan aims to change some of the perceptions currently surrounding higher education in America. For our economy to remain healthy, education is of the utmost importance. Unfortunately, thousands of dollars of potential student debt has discouraged many from attending college, and plans such as this one hope to minimize that hesitancy, while at the same time showing the world that the United States still values education.
While the plan has some opposition (I am actually not completely certain that I support it in its entirety), it’s fantastic to see lawmakers paying attention to the millions of citizens that are pursuing (or have pursued) a higher education. Most of us, regardless of political opinion, value education, and a well-educated America is an integral part of emerging from our current economic climate.