Obama Administration to Reduce Student Loan Payments
This afternoon, President Obama addressed a crowd in downtown Denver at the University of Colorado. Central to the President’s speech was the new “Pay As You Earn” proposal that the White House announced yesterday. The proposal aims to reduce monthly payments for student loans, by consolidating loans and capping payments. Starting next year, students will be able to cap their loan payments at ten percent of discretionary income, and after 20 years the debt will be forgiven. Current laws cap student loan payments at 15 percent of discretionary income with loan forgiveness after 25 years. According to a White House press statement, the proposal will benefit 1.6 million students at no cost to taxpayers.
“It can put more money in your pocket once you graduate,” Obama said in today’s speech, emphasizing that’s important for all Americans to have an equal opportunity to have access to higher education. “It’s important for our country’s future.”
In conjunction with the “Pay As You Earn” proposal, the Consumer Financial Protection Bureau will release a Financial Aid Shopping Sheet that will help students better understand the types of loans and finical aid that’s available to them before they go into debt. “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. And we can do it at no cost to the taxpayer,” said U.S. Secretary of Education Arne Duncan in the White House statement.
At the end of today’s speech, the President rallied students to participate to the political process and to communicate with their government representatives.
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